Best complete read IAS 24 Disclosure Related party transactions

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Disclosure Related party transactions provides a summary of IFRS reporting requirements regarding IAS 24 Related party transactions and a possible disclosure schedule. However, as this publication is a reference tool, no disclosures have been removed based on materiality. Instead, illustrative disclosures for as many common scenarios as possible have been included. Please note that the amounts disclosed in this publication are purely for illustrative purposes and may not be consistent throughout the example disclosure related party transactions.


All of the related party information required by IAS 24 that is relevant to the Reporting entity Plc has been presented, or referred to, in one note. This is considered to be a convenient and desirable method of presentation, but there is no requirement to present the information in this manner. Compliance with the standard could also be achieved by disclosing the information in relevant notes throughout the financial statements.


The disclosures required by IAS 24 apply to the financial statements when the information is material. According to IAS 1 Presentation of Financial Statements, Disclosure Related party transactionsmateriality depends on the size and nature of an item. It may be necessary to treat an item or a group of items as material because of their nature, even if they would not be judged material on the basis of the amounts involved. This may apply when transactions occur between an entity and parties who have a fiduciary responsibility in relation to that entity, such as those transactions between the entity and its key management personnel. [IAS1.7]

Key management personnel compensation

While the disclosures under paragraph 17 of IAS 24 are subject to materiality, this must be determined based on both quantitative and qualitative factors. In general, it will not be appropriate to omit the aggregate compensation disclosures based on materiality. Whether it will be possible to satisfy the disclosure by reference to another document, such as a remuneration report, will depend on local regulation. IAS 24 itself does not specifically permit such cross-referencing.

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IAS 24 Related parties by definition

IAS 24 Related parties by definition starts with two classes of related parties:Third party services

  • person(s) IAS 24 Related parties by definition
  • entity(ies) IAS 24 Related parties by definition

in relation to the central entity in this standards the REPORTING ENTITY. IAS 24 Related parties by definition

The reporting entity in IAS 24 is referred to (so it strictly is spoken not an IFRS Definition) as the entity that is preparing its financial statements (consolidated and/or unconsolidated).


For persons it includes close members of that person’s family – where family is sometimes broader than a domestic (legal) definition of a married couple, as follows:

Starting point is a person and its relation with the reporting entity, the (related party) person has … Read more

Related parties transfer pricing

Related parties transfer pricing is one of the most important issues in international tax and as a result also needs disclosure under IAS 24 Related party disclosures.

Transfer pricing is the general term for the pricing of cross‐border, intra‐firm transactions between related parties. These transactions can include transfers of intangible property, tangible goods, or services as well as loans or other financing transactions.

Most countries’ transfer pricing legislation is based on the ‘arm’s length principle’.

Transfer pricing methodologies

There are a number of transfer pricing methodologies for determining the arm’s length basis of a transaction. For example, the OECD recognises Comparable Uncontrolled Price, resale price, cost plus, transactional net margin, and transactional profit split methods as acceptable but other … Read more

Understanding related party disclosures – Best 2 be read in full

Understanding related party disclosures

Example Understanding related party disclosures shows two disclosures of related-party transactions. Here is a real life disclosure from Petrobas in Brasil followed by an example from IAS 24:

Disclosure requirements

Relationships between a parent and its subsidiaries is disclosed irrespective of whether there have been transactions between them. An entity discloses the name of its parent and, if different, the ultimate controlling party. If neither the entity’s parent nor the ultimate controlling party produces consolidated financial statements available for public use, the name of the next most senior parent that does so is also be disclosed.

To enable users of financial statements to form a view about the effects of related party relationships on an entity, … Read more

What are related parties?

What are related parties – Related parties are relationships in which one party has the ability to control or significantly influence the economic and operating decisions of another. Transactions with related parties are a common feature of business. Typically related party relationships include the following:

  • Enterprises controlled or controlling one another, such as subsidiaries and joint venturesWhat are related parties
  • Individuals having an interest in the enterprise that gives them significant influence over the enterprise, such as majority owners
  • Key management personnel responsible for planning, directing and controlling the activities of the reporting enterprise, including close members of families of these individuals

Parties are considered related when one of the parties has control over the other or is able to exert considerable influenceRead more

Loans to an employee

Loans to an employee

See also Loans at below-market interest rates and Inter-company loans for further discussions on related-party loans.

In contrast to the accounting for the below-market element of inter-company loans, the treatment of the below-market element of a loan to an employee is addressed by specific Standards. The effect of a below-market element in loans to an employee is starting with a general discussion on loans to employees, followed by a discussion for the following specific types of loans to employees:

  • loans to an employee linked to the entity’s shares
  • forgivable loans.

General discussion: Loans to employees

Where an entity makes a loan to an employee that is not on normal commercial terms, our view is that the Read more

Inter-company loans

Inter-company loans

Inter-company loans (in the separate or individual financial statements)

See also Loans at below market interest rates and Loans to an employee for further discussions on related party loans.

The accounting for the below-market element of an inter-company loan in the separate or individual financial statements of the entities is not addressed by a specific Standard. As a result, the accounting for such transactions is conducted by applying the principles set out in the Conceptual Framework, in particular its definitions of assets, liabilities and equity.

The effect of this in accounting for the below-market element relating to the following types of inter-company loans is discussed below in more detail:

  • fixed term loan from a parent to a subsidiary
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Loans at below-market interest rates

Loans at below-market interest rates – Normally the transaction price of a loan (ie the loan amount) will represent its fair value. For loans made to related parties however, this may not always be the case as such loans are often not on commercial terms. Where this is the case, the fair value of the loans must be calculated and the difference between fair value and transaction price accounted for. A framework for analysing both the initial and subsequent accounting for such loans is discussed in here. Common examples of such loans include inter-company loans (in the separate or individual financial statements) and employee loans. Loans at below-market interest rates

Financing arrangements between entities within the same group can take … Read more