International Financial Reporting Standards_guide.pdf

CHAPTER 31
Related-Party Disclosures (IAS 24)
31.1 OBJECTIVE
A related-party relationship between entities or individuals is unlike the more usual type
between independent businesses. Related-party relationships and transactions can have an
effect on the financial position and operating results of the reporting entity because the transactions
may not always be on an arm’s-length basis. The objective of this standard is to define
related-party relationships and transactions and disclose their effects on an entity’s financial
position and performance.
31.2 SCOPE OF THE STANDARD
This IAS should be applied when identifying related-party relationships, transactions, and
outstanding balances between related parties and the circumstances under which these aspects
should be disclosed.
31.3 KEY CONCEPTS
31.3.1 Related-party relationships include any of the following:
■ an entity that directly or indirectly
– controls or is controlled (or under common control) by another entity;
– has significant influence;
– has joint control;
■ entities that are subsidiaries of the reporting entity per IAS 27;
■ entities that are associates of the reporting entity per IAS 28;
■ entities that are joint ventures of the reporting entity per IAS 31;
■ relationships between key management personnel (including any directors and officers
of the reporting entity and any close family members of these directors and officers)
responsible for planning, directing, and controlling the activities of the reporting entity;
■ entities in which a substantial interest in the voting power is held, either directly or
indirectly, by individuals (key management personnel or their close family members),
including subsidiaries, associates, or joint ventures; and
■ postemployment benefit plans for employees of the reporting entity, or for any entity
that is a related party to the reporting entity.
327