FRS 

24 – Related Party Disclosures

Learning
g objectives:-
j
•Understand the nature of related parties
disclosures.
disclosures

Reference
-FRS 24 - Related Party Disclosures
-FRS
FRS 24 - Related Party Disclosures –
Illustrative examples.
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Related party – definition

• (a) A person or a close member of that person’s
person s family
is related to a reporting
p g entity
y if that p
person:

– (i) has control or joint control over the reporting

entity;

– (ii) has significant influence over the reporting entity;

– (iii) is a member of the key management personnel

of the reporting entity or of a parent of the reporting
entity.
y
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Related party – definition
• (b) An entity is related to a reporting entity if :
(i) The entity and the reporting entity are members of the
same group (i.e. parent, subsidiary and fellow subsidiary
is related to the others).
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
party.
(iv) One entity is a joint venture of a third entity and the other
entity is an associate of the third entity.
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Related party – definition

• (b) An entity is related to a reporting entity if :
(v) 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.
(vi) The entity is controlled by a person identified in (a)
(a).
(vii) 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)

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Related party – definition
• Key management personnel are those persons having
authority and responsibility for planning, directing and
controlling the activities of the entity, including director of
that entity.
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.

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Disclosure
• Parent and subsidiaryy relationship ((name of parent and ultimate controlling
g
party).
• Compensation of key management personnel (e.g. short term
compensation, post employment benefits, share payments).
• At a minimum
minimum, disclosures shall include:
(a) the amount of the transactions;
(b) the amount of outstanding balances
(i) their terms and conditions
(ii) guarantees given or received;
((c)) p
provisions for doubtful debts and
(d) the expense recognised for doubtful debts due from related parties.

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Government‐related
Government related entities 
entities
• Exempt from the disclosure requirements of on
related party transactions with:
(a) a government that has control, joint control or
significant influence over the reporting entity; and
(b) another entity that is a related party because the
same government has control, joint control or
significant influence over both the reporting entity
and the other entity
entity.
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Government‐related
Government related entities 
entities
If exemption applies, need to disclose:

(a) the name of the government and the nature of its relationship with the
reporting entity (i.e. control, joint control or significant influence)

(b) the following information to enable users to understand the effect of

related party transactions on its financial statements:

((i)) the nature and amount of each individuallyy significant

g transaction

(ii) for other transactions that are collectively, but not individually,
significant,
i ifi t a qualitative
lit ti or quantitative
tit ti iindication
di ti off th
their
i extent.
t t

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 S lf t d C
Self‐study Cases
• Read FRS 24 - Related Party Disclosures
• Read FRS 24 - Related Party Disclosures
– Illustrative examples
examples.
• Review the application of FRS 24 in FRS
24 illustrative examples.

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