The objective of this Standard 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 & loss may have been affected by the
existence of related parties.
A related party is a person or entity that is
related to the entity preparing the financial
statements (reporting entity).
The related party directly or indirectly
(a) Controls, is controlled by, or is under common
control with, the entity (this includes parents,
subsidiaries and fellow subsidiaries).
(b) Has an interest in the entity that gives it
significant influence over the entity
(c) Has joint control over the entity.
The related party is:
• An associate or joint venture of the entity
• A member of key management of the
entity or its parent
• A close family member of an individual
related to the entity.
• An entity that is controlled, jointly
controlled or significantly influenced by a
member of key management. or a close
family member of a related party.
• A post-employment benefit plan for the
benefit of the entity’s employees, or of any
entity that is a related party of the entity.
controlled by owners
or key management
Key management personnel
It is a transfer of resources, services or
obligations between a reporting entity and a
related party, regardless of whether a price has
been charged or not.
purchases or sales;
rendering or receiving services;
transfer of research and development;
license agreements, finance arrangements,
settlement of liabilities and provision of
guarantees and collateral.
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.
the power to participate in the financial
and operating policy decisions of an
entity, but does not have control over
It may be gained by share ownership,
statute or agreement.
IAS 24 specifies that the following are not
necessarily related parties:
(a) Two entities simply because they have a director
or key manager in common
(b) Two venturers simply because they share joint
control over a joint venture.
(c) Providers of finance, trade unions, public utilities,
and government bodies, simply by virtue of their
normal dealings with the entity.
(d) A customer, supplier, franchisor, distributor or
general agent with whom an entity transacts a
significant volume of business, merely by virtue of
the resulting economic dependence
Relationships between parents and its subsidiaries
must be disclosed irrespective of whether there have
been transactions between them or not.
An entity shall disclose the name of its parent or 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 shall also be
(a) Purchases or sales of finished or unfinished
(b) Purchases or sales of property or assets.
(c) Rendering or receiving of services
(e) Transfers of research and development
(f) Transfers under finance arrangements (including
loans and equity contributions in cash or in kind)
(g) Provision of guarantees and collateral.
(h) Management compensation (salaries, wages,
compensations, pensions etc.)
Entities with joint control/significant
influence over the entity
Key management personnel
Other related parties