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Related parties (IAS 24)

VIVA Subject Guide
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A party is related to an entity if it either:

  • controls, is controlled by, or is under common control with, the entity

  • has an interest in the entity that gives a significant influence over the entity

  • has joint control over the entity

  • is an associate (IAS 28 Investment in Associates)

  • is a joint venture in which the entity is a venturer (IAS 31 Interests in joint ventures)

  • is a member of the key management personnel of the entity or its parent

  • is a close family member of any of the above

  • is a post-employment benefit plan for the employees of the entity or of any entity that is a related party of the entity

  • Purchase or sale of goods/components

  • Purchase or sale of asset/property

  • Provision and receipt of services

  • Leasing (operating/finance)

  • Research and development transfers

  • Settlement of another party’s liabilities

3 Key management personnel

Those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director of that entity.

Relationships between parents and subsidiaries shall be disclosed irrespective of whether there have been transactions between those related parties.

  • Name of entity’s parent and;

  • If different the ultimate controlling party

5 Disclosure of transactions and balances generally

If there have been transactions between related parties, an entity should disclose the nature of the related party relationships as well as information about the types of transactions and the outstanding balances necessary for an understanding of the financial statements.

Disclosure should be made irrespective of whether a price is charged.

At a minimum the disclosure should include:

  • The amount of the transactions

  • The amount of outstanding balances, including terms and conditions, whether they are secured and the nature of the consideration to be provided

  • Provisions for doubtful debts based on the amount outstanding

  • The expense recognised during the period in relation to bad and doubtful debts

The above should be made separately for each of the following

  • The parent

  • Entities with joint control or significant influence over the entity

  • Subsidiaries

  • Associates

  • Joint ventures in which the entity is a venture

  • Key management personnel

  • Other related parties

6 Disclosure of key management personnel compensation

Key management personnel compensation in total and for each of the following;

  • Short-term employee benefits

  • Post-employment benefits

  • Other long term benefits

  • Share based payments

Note: Providers of finance, trade unions, utility providers, government departments, customers and suppliers are NOT related parties.