IAS 24 RELATED = PARTY DISCLOSURES
HISTORY OF IAS = 24
March 1983	Exposure Draft E25 Disclosure of Related Party Transact= ions
July 1984	IAS 24 Related Party Disclosures<= /p>
1 January 1986	Effective Date of IAS 24 (1984) Related Party Disclosur= es
1994	IAS 24 was reformatted
18 December 2003	Revised version of IAS 24 issued by the IASB The summary below reflects = those revisions.
1 January 2005	Effective date of IAS 24 (Revised 2003)<= /p>
February 2007	Exposure Draft of Proposed Amendm= ents to IAS 24 issued Click for Press Release (PDF 63k)
RELATED INTERPR= ETATIONS
Issues Re= lating to This Standard that IFRIC Did Not Add to Its Agenda
AMENDMENTS UNDER CONSIDERATION BY IASB
State-Cont= rolled Entities

SUMMARY OF IAS = 24

Objective of IAS 24=

The objective of IAS 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 balanc= es with such parties.

Who Are Related Parties?=

Partie= s are considered to be related if one party has the ability to control the ot= her party or to exercise significant influence or joint control over the ot= her party in making financial and operating decisions.

A part= y is related to an entity if: [IAS 24.9]

(a) directly, or indir= ectly through one or more intermediaries, the party: <= /li>
- (i) controls, is controlled by, or is under common control with, the entity (this includes parents, subsidiaries and fellow subsidiari= es);
- (ii) has an interest = in the entity that gives it significant influence over the entity; or
- (iii) has joint contr= ol over the entity;
(b) the party is an associate (as defined in IAS 28 Investments in Associates) of the entity;
(c) the party is a joi= nt venture in which the entity is a venturer (see IAS 31 Interests in Joint Ventures);
(d) the party is a mem= ber of the key management personnel of the entity or its parent;
(e) the party is a clo= se member of the family of any individual referred to in (a) or (d); =
(f) the party is an en= tity that is controlled, jointly controlled or significantly influenced= by or for which significant voting power in such entity resides with, directly or indirectly, any individual referred to in (d) or (e); = or
(g) the party is a post-employment benefit plan for the benefit of employe= es of the entity, or of any entity that is a related party of the ent= ity.

Prior = to the 2003 revision of IAS 24, state-controlled entities were exempted from t= he related party disclosures. That exemption has been removed in the 2003 revision. Therefore, profit-oriented state-controlled entities that use IFRS are no longer exempted from disclosing transactions with other state-controlled entities.

The following are deemed not to be related: [IAS 24.11] <= /p>

two enterprises simply because they have a director or key manager in common; =
two venturers who share joint control over a joint venture;
providers of finance, = trade unions, public utilities, government departments and agencies in t= he course of their normal dealings with an enterprise; and
a single customer, supp= lier, franchiser, distributor, or general agent with whom an enterprise = transacts a significant volume of business merely by virtue of the resulting economic dependence.

What Are Related Party Transact= ions?

A rela= ted party transaction is a transfer of resources, services, or obligations between related parties, regardless of whether a price is charged. [IAS 24.9]

Disclosure

Rel= ationships between parents and subsidiaries. Regardless of whether there have been transactions between a parent and a subsidiary, an entity must disclose= the name of its parent and, if different, the ultimate controlling party. If neither the entity's parent nor the ultimate controlling party produces financial statements available for public use, the name of the next most senior parent that does so must also be disclosed. [IAS 24.12]

Man= agement compensation. Disclose key management personnel compensation in total a= nd for each of the following categories: [IAS 24.16]

short-term employee benefits;
post-employment benefi= ts;
other long-term benefi= ts;
termination benefits; = and
equity compensation benefits= .

Key management personnel are those persons having authority and responsibil= ity for planning, directing, and controlling the activities of the entity, directly or indirectly, including all directors (whether executive or otherwise). [IAS 24.9]

Rel= ated party transactions. If there have been transactions between related parties, disclose the nature of the related party relationship as well = as information about the transactions and outstanding balances necessary f= or an understanding of the potential effect of the relationship on the financial statements. These disclosure would be made separately for each category of related parties and would include: [IAS 24.17-18]

The amount of the transactions.
The amount of outstand= ing balances, including terms and conditions and guarantees.
Provisions for doubtful debts related to the amount of outstanding balances.
Expense recognised during the period in respect of bad or doubtful debts due from rel= ated parties.

Examples of t= he Kinds of Transactions that Are Disclosed If They Are with a Related P= arty

Purchases or sales of goods.
Purchases or sales of property and other assets.
Rendering or receivi= ng of services.
Leases. <= /span>
Transfers of researc= h and development.
Transfers under licence agreements.
Transfers under fina= nce arrangements (including loans and equity contributions in cash o= r in kind).
Provision of guarant= ees or collateral.
Settlement of liabil= ities on behalf of the entity or by the entity on behalf of another pa= rty.

A stat= ement that related party transactions were made on terms equivalent to those = that prevail in arm's length transactions should be made only if such terms = can be substantiated. [IAS 24.21]