TMI BlogRelated Party DisclosuresX X X X Extracts X X X X X X X X Extracts X X X X ..... Standard requires disclosure of related party relationships, transactions and outstanding balances, including commitments, in the consolidated and separate financial statements of a parent or investors with joint control of, or significant influence over, an investee presented in accordance with Ind AS 110,Consolidated Financial Statements, or Ind AS 27, Separate Financial Statements. This Standard also applies to individual financial statements. 4 Related party transactions and outstanding balances with other entities in a group are disclosed in an entity s financial statements. Intragroup related party transactions and outstanding balances are eliminated, except for those between an investment entity and its subsidiaries measured at fair value through profit or loss, in the preparation of consolidated financial statements of the group. 4A 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. 4B In case a statute or a regulator o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at is preparing its financial statements (in this Standard referred to as the reporting entity ). (a) A person or a close member of that person s family is related to a reporting entity if that person: (i) has control or joint control of the reporting entity; (ii) has significant influence over the reporting entity; or (iii) is a member of the key management personnel of the reporting entity or of a parent of the reporting entity. (b) An entity is related to a reporting entity if any of the following conditions applies: (i) 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). (ii) 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). (iii) Both entities are joint ventures of the same third party. (iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity. (v) The entity is a post-employment benefit plan for the benefit of employees of either the reporting entity or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after the end of the period, profit-sharing, bonuses and deferred compensation; (d) termination benefits; and (e) share-based payment. Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity. Government refers to government, government agencies and similar bodies whether local, national or international. A government-related entity is an entity that is controlled, jointly controlled or significantly influenced by a government. The terms control and investment entity , joint control and significant influence are defined in Ind AS 110, Ind AS 111, Joint Arrangements, and Ind AS 28, Investments in Associates and Joint Ventures, respectively and are used in this Standard with the meanings specified in those Ind ASs. 10 In considering each possible related party relationship, attention is directed to the substance of the relationship and not merely the legal form. 11 In the context of this Standard, the following are not related parties: (a) two ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atements. Such a related party may establish the entity s credit standing, determine the source and price of its raw materials, and determine to whom and at what price the product is sold. 15 The requirement to disclose related party relationships between a parent and its subsidiaries is in addition to the disclosure requirements in Ind AS 27 and Ind AS 112, Disclosure of Interests in Other Entities. 16 Paragraph 13 refers to the next most senior parent. This is the first parent in the group above the immediate parent that produces consolidated financial statements available for public use. 17 An entity shall disclose key management personnel compensation in total and for each of the following categories: (a) short-term employee benefits; (b) post-employment benefits; (c) other long-term benefits; (d) termination benefits; and (e) share-based payment. 17A If an entity obtains key management personnel services from another entity (the management entity ), the entity is not required to apply the requirements in paragraph 17 to the compensation paid or payable by the management entity to the management entity s employees or directors. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder licence agreements; (g) transfers under finance arrangements (including loans and equity contributions in cash or in kind); (h) provision of guarantees or collateral; (i) commitments to do something if a particular event occurs or does not occur in the future, including executory contracts 1 (recognised and unrecognised); (j) settlement of liabilities on behalf of the entity or by the entity on behalf of that related party; and (k) management contracts including for deputation of employees. 22 Participation by a parent or subsidiary in a defined benefit plan that shares risks between group entities is a transaction between related parties (see paragraph 42 of Ind AS 19). 23 Disclosures that related party transactions were made on terms equivalent to those that prevail in arm s length transactions are made only if such terms can be substantiated. 24 Items of a similar nature may be disclosed in aggregate except when separate disclosure is necessary for an understanding of the effects of related party transactions on the financial statements of the entity. 24A Disclosure of details of particular transactions with individual related parties would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icant in terms of size; (b) carried out on non-market terms; (c) outside normal day-to-day business operations, such as the purchase and sale of businesses; (d) disclosed to regulatory or supervisory authorities; (e) reported to senior management; (f) subject to shareholder approval. Appendix 1 Note: This Appendix is not a part of the Indian Accounting Standard. The purpose of this Appendix is only to bring out the major differences, if any, between Indian Accounting Standard (Ind AS) 24 and the corresponding International Accounting Standard (IAS) 24, Related Party Disclosures, issued by the International Accounting Standards Board. Comparison with IAS 24, Related Party Disclosures 1. In the Ind AS 24, disclosures which conflict with confidentiality requirements of statute/regulations are not required to be made since Accounting Standards cannot override legal/regulatory requirements. (Paragraphs 4A and 4B of Ind AS 24). 2. Paragraph 24A has been included in the Ind AS 24. It provides additional clarificatory guidance regarding aggregation of transactions for disclosure. 3. Different terminology is used in this standard, eg, the term balan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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