Indian Accounting Standard 24 requires disclosures to be made by a parent entity regarding its transactions with associates, joint ventures or subsidiaries, collectively referred to as Related party. Hence related party refers to an entity or person that is related to the reporting entity. The objective of this standard is to bring to notice the
fact that an entity’s financial statements and profit or loss can be affected by transactions with the related party transactions and disclose outstanding balances including commitments to such parties. This standard shall be applied to: The standard also requires disclosure of related party relationships transactions, outstanding balances including commitments in the consolidated financial statements, separate financial statements, and individual financial statements. In case a statute or regulatory body or similar competent authority governing an entity prohibits the entity from
disclosing certain information that is required by this standard, then the disclosure of such information is not warranted. For instance banks, stock broking entities are not permitted to disclose customer related information, hence such information need not be disclosed. പോസ്റ്റുകളിലൂടെAboutThe 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 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 historyIn 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). Ind AS-24: Related Party Disclosures (By incorporating Changes as per Companies (Indian Accounting Standards) Amendments Rules 2021). Each Accounting Standard offers wide variety of practical applications to the stakeholders in respect of full disclosure and transparency. Therefore, I hereby try to summarize various dimensions with regard to the Accounting Standard related with IndAS-24: Related Party Disclosures (By incorporating Changes as per Companies (Indian Accounting Standards) Amendments Rules 2021).  1. The Accounting Standards related with “Related Party Disclosures.” A. Ind AS -24 B. IAS-24 2. Differences between IAS 24 and INDAS 24
No Major differences between INDAS 24 and INDAS 24 except the above. Therefore, the following paragraphs relate to both INDAS 24and IAS 24. 3. Objective To ensure that entity financial statements contains disclosure about related parties and by transactions and outstanding balances, including commitments, with such parties. 4. Scope I. This Standard shall be applied in: (a) identifying related party relationships and transactions; b) identifying outstanding balances, including commitments, between an entity and its related parties; (c) identifying the circumstances in which disclosure of the items in (a) and (b) is required; and (d) determining the disclosures to be made about those items. II. This standard requires disclosuresof 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 . 5. Definitions. a. A related party A related party is a person or entity that is related to the entity that is preparing its financial statements (in this Standard referred to as the ‘reporting entity’). b. 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. c. 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 an entity related to the reporting entity. If the reporting entity is itself such a plan, the sponsoring employers are also related to the reporting entity. (vi) The entity is controlled or jointly controlled by a person identified in (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). (viii) The entity, or any member of a group of which it is a part, provides key management personnel services to the reporting entity or to the parent of the reporting entity. d. 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. e. 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 f. Disclosures. I. Relationships between a parent and its subsidiaries shall be disclosed irrespective of whether there have been transactions between them. II. 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. III. If an entity obtains key management personnel services from another entity (the management entity),the entity is not required to apply the requirements in the above mentioned point (II ) to the compensation paid or payable by the management entity to the management entity’s employee or directors. IV. The disclosures shall include (a) the amount of the transactions; (b) the amount of outstanding balances, including commitments, and: (i) their terms and conditions, including whether they are secured, and the nature of the consideration to be provided in settlement; and (ii) details of any guarantees given or received; (c) provisions for doubtful debts related to the amount of outstanding balances; and (d) the expense recognised during the period in respect of bad or doubtful debts due from related parties. V.The disclosures required shall be made separately for each of the following categories: (a) the parent; (b) entities with joint control of, or significant influence over, the entity; (c) subsidiaries; (d) associates; (e) joint ventures in which the entity is a joint venturer; (f) key management personnel of the entity or its parent; and (g) other related parties. VI The following are examples of transactions that are disclosed if they are related with the above mentioned parties (The list is not exhaustive) (a) purchases or sales of goods (finished or unfinished); (b) purchases or sales of property and other assets; (c) rendering or receiving of services; (d) leases; (e) transfers of research and development; (f) transfers under 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 (recognized and unrecognized); and (j) settlement of liabilities on behalf of the entity or by the entity on behalf of that related party. Participation by a parent or subsidiary in a defined benefit plan that shares (K) Management contracts including for deputation of employees VII. Government Related Entities will get partial exemption with respect to the above disclosures. A reporting entity is exempt from the disclosure requirements in relation to related party transactions and outstanding balances, including commitments, with: (a) a government that has control or joint control of, or significant influence over, the reporting entity; and (b) another entity that is a related party because the same government has control or joint control of, or significant influence over, both the reporting entity and the other entity. If a reporting entity applies the exemption above , it shall disclose the following about the transactions and related outstanding balances referred to the above : (a) the name of the government and the nature of its relationship with the reporting entity (ie control, joint control or significant influence); (b) the following information in sufficient detail to enable users of the entity’s financial statements to understand the effect of related party transactions on its financial statements: (i) the nature and amount of each individually significant transaction; and (ii) for other transactions that are collectively, but not individually, significant, a qualitative or quantitative indication of their extent. (Article was originally published on 28.09.2020 and republished with further updates on 14.08.2021) What is the objective and scope and disclosure of related party as per ind as 24?1 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 or loss may have been affected by the existence of related parties and by transactions and outstanding balances, including ...
What are related party disclosures Ind AS 24?Related party transactions and outstanding balances with other entities in a group are disclosed in an entity's financial statements. Intra-group related party transactions and outstanding balances are eliminated in the preparation of consolidated financial statements of the group.
What is the objective of related party transactions?The objective of these Rules pertaining to Related Party Transactions is to ensure that the interests of shareholders as a whole are taken into account by a Listed Entity when entering into Related Party Transactions.
What are the disclosure requirements for related party transactions?If the entity has transactions with the related party during the financial year, then it shall disclose the nature of such transactions, and also all the details such as amount, outstanding balances including commitments, provision for doubtful debts, and the expense recognised in respect of bad and doubtful debts.
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