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Amendments to IAS 24 Related Party Disclosures

Date recorded:

The Board discussed proposals for clarification of the requirements in IAS 24 to disclose relationship and transactions between an associate and a subsidiary of that associate's significant investor. The Board considered four issues:

Issue 1: A relationship between a Subsidiary (C) in a group and an Associate (B) where the parent (A) of entity C also has significant influence over entity B. What are the disclosure requirements in entity B's separate financial statements?

The Board agreed that the opportunity should be taken to amend IAS 24 to clarify that transactions between entity C and entity B should be disclosed in entity B's separate financial statements.

Issue 2: A relationship between entity B and entity C. Does the current IAS 24 require these transactions to be disclosed in Entity A's consolidated financial statements?

The Board agreed that these transactions should be disclosed in entity A's consolidated financial statements and that this requirement should be clarified.

Issue 3: A relationship between entity B and entity C. Does the current IAS 24 require disclosure of these transactions in entity C's individual financial statements?

The Board confirmed that the separate financial statement of C does not include the operations of the group of which it is a part. Therefore, current IAS 24 does not require disclosure of the relationship between B and C in this situation, because C is the reporting entity. The Board agreed that control could be exercised through the parent and that A could compel C to transact with B in a way that did not benefit C the most (rather A or the group). It would therefore be inconsistent with the objective of IAS 24 not to require disclosure.

The Board decided that IAS 24 should be amended to reflect that a transaction as described in issue 3 should be disclosed in entity C's individual financial statement.

Issue 4: A relationship between entity B and entity D (another associate of A). Does the current IAS 24 require disclosure in either entity B, entity D or group AC's financial statements?

The Board confirmed that this is a situation where it is a relationship between two entities not controlled by any entity in the group (absence of control). It also confirmed that this is a situation that is not within the definition of a related party and should be scoped out of IAS 24.

As a result to this the Board confirmed that the relief should include associates of a fellow subsidiary.

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