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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 balances, including commitments, with such parties.
A related party is a person or an entity that is related to the reporting entity:
- A person or a close member of that person’s family is related to a reporting entity if that person has control, joint control, or significant influence over the entity or is a member of its key management personnel.
- An entity is related to a reporting entity if, among other circumstances, it is a parent, subsidiary, fellow subsidiary, associate, or joint venture of the reporting entity, or it is controlled, jointly controlled, or significantly influenced or managed by a person who is a related party.
A related party transaction is a transfer of resources, services or obligations between a reporting entity and a related party, regardless of whether a price is charged. If an entity has had related party transactions during the periods covered by the financial statements, IAS 24 requires it to disclose the nature of the related party relationship as well as information about those transactions and outstanding balances, including commitments, necessary for users to understand the potential effect of the relationship on the financial statements.
IAS 24 requires an entity to disclose key management personnel compensation in total and by category as defined in the Standard.
Standard history
In April 2001 the International Accounting Standards Board (Board) adopted IAS 24 Related Party Disclosures, which had originally been issued by the International Accounting Standards Committee in July 1984.
In December 2003 the Board issued a revised IAS 24 as part of its initial agenda of technical projects that included amending disclosures on management compensation and related party disclosures in separate financial statements. The Board revised IAS 24 again to address the disclosures in government‑related entities.
In November 2009 the Board issued a revised IAS 24 to simplify the definition of ‘related party’ and to provide an exemption from the disclosure requirements for some government‑related entities.
Other Standards have made minor consequential amendments to IAS 24. They include IFRS 10 Consolidated Financial Statements (issued May 2011), IFRS 11 Joint Arrangements (issued May 2011), IFRS 12 Disclosure of Interests in Other Entities (issued May 2011), IAS 19 Employee Benefits (issued June 2011), Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27) (issued October 2012) and Annual Improvements to IFRSs 2010–2012 Cycle (issued December 2013).
