Ind AS 24, Related Party Disclosures: The objective of Ind AS 24 is to ensure that an entity’s financial statements contain the disclosures necessary to draw attention to the possibility that its financial position and profit or loss may have been affected by the existence of related parties and by transactions and outstanding balances, including commitments, with such parties.
Related party disclosure requirements as laid down in this Standard do not apply in circumstances where providing such disclosures would conflict with the reporting entity’s duties of confidentiality as specifically required in terms of a statute or by any regulator or similar competent authority.- A person or a close member of that person’s family is related to a reporting entity if that person:
- has control or joint control of the reporting entity;
- has significant influence over the reporting entity; or
- is a member of the key management personnel of the reporting entity or of a parent of the reporting
- An entity is related to a reporting entity if any of the following
conditions applies:
- The entity and the reporting entity are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).
- One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).
- Both entities are joint ventures of the same third party.
- One entity is a joint venture of a third entity and the other entity is an associate of the third
- The entity is a post-employment benefit plan for the benefit of employees of either the reporting entity or an entity related to the reporting entity. If the reporting entity is itself such a plan, the sponsoring employers are also related to the reporting entity.
- The entity is controlled or jointly controlled by a person identified in (a).
- A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).
- The entity, or any member of a group of which it is a part, provides key management personnel services to the reporting entity or to the parent of the reporting
- that person’s children, spouse or domestic partner, brother, sister, father and mother;
- children of that person’s spouse or domestic partner; and
- dependants of that person or that person’s spouse or domestic partner.
- short-term employee benefits;
- post-employment benefits;
- other long-term benefits;
- termination benefits; and
- share-based (Paragraph 17 of the Standard)
- the amount of the transactions;
- the amount of outstanding balances, including commitments, and:
- their terms and conditions, including whether they are secured, and the nature of the consideration to be provided in settlement; and
- details of any guarantees given or received;
- provisions for doubtful debts related to the amount of outstanding balances; and
- the expense recognised during the period in respect of bad or doubtful debts due from related (Paragraph 18 of the Standard)
- the parent;
- entities with joint control of, or significant influence over, the entity;
- subsidiaries;
- associates;
- joint ventures in which the entity is a joint venturer;
- key management personnel of the entity or its parent; and
- other related
- a government that has control or joint control of, or significant influence over, the reporting entity; and
- another entity that is a related party because the same government has control or joint control of, or significant influence over, both the reporting entity and the other (Paragraph 25 of the Standard)
- the name of the government and the nature of its relationship with the reporting entity (ie control, joint control or significant influence);
- the following information in sufficient detail to enable users of the entity’s financial statements to understand the effect of related party transactions on its financial statements:
- the nature and amount of each individually significant transaction; and
- for other transactions that are collectively, but not individually, significant, a qualitative or quantitative indication of their extent. Types of transactions include those listed in paragraph 21 of the Standard.
Difference Between AS 18 and Ind AS 24
| Basis | Ind AS 24 | AS 18 |
|---|---|---|
| Definition of Relative | Uses the term ― a close member of the family of a person | Uses the term ― relatives of an individual. |
| Relative covers | Children, spouse or domestic partner, brother, sister, father and mother; children of that person‘s spouse or domestic partner; and dependants of that person or that person‘s spouse or domestic partner. | Covers the spouse, son, daughter, brother, sister, father and mother |
| KMP | Covers KMP of the parent as well | KMP of the entity only |
| Related Parties in case of Joint Venture | Co-venturers or co-associates are related to each other. | Co-venturers or co-associates are not related to each other |
| Post-employment Benefits | Specifically includes post-employment benefit plans for the benefit of employees of an entity or its related entity as related parties. | Does not specifically cover entities that are post-employment benefit plans, as related parties |
| Next Most Senior Parent | Additional disclosure is required for such parent. | No such provision |
| Disclosure for Compensation | Extended disclosures for compensation of KMP under different categories | Not required. |
| Disclosure of ‘Amount of the Transactions’ vs ‘Volume of the Transactions | The amount of the transactions need to be disclosed | Option to disclose the - Volume of the transactions either as an amount or as an appropriate proportion |
| Government Related Entities | Disclosures of certain information by the government related entities. | Presently exempts the disclosure of such information |