Proposal to amend related party disclosure standard

  • IASB Exposure Draft (original) Image

22 Feb 2007

The IASB has published an exposure draft of proposed amendments to IAS 24 'Related Party Disclosures'.

The amendments would:

  • Exempt some state-controlled entities from related party disclosures
  • Change the definition of a 'related party'.

Comment deadline is 25 May 2007. The ED is now available for eIFRS subscribers and will be freely available on the IASB's website from 5 March 2007.

Click for Press Release (PDF 63k). Here is the IAS Plus Project Summary for the IAS 24 amendment project.


Proposed amendments to IAS 24

State controlled entities

The ED proposes to reduce the disclosure requirements in IAS 24 for some entities that are related only because they are each state-controlled or significantly influenced by the state. The changes respond to concerns expressed by interested parties about the difficulties that these entities have in obtaining the information required by IAS 24. In many cases, the entities affected may not even know that they are related to others controlled or influenced by the state. The IASB concluded that for those entities affected the cost of complying with IAS 24 is likely to outweigh the benefits of the disclosures to users of their financial statements. The exemption proposed is limited to those circumstances in which it is clear that the related entities are not influencing each other.

Definition of 'related party'

The main amendments to the definition are:

  • the inclusion, in the definition of a related party, of the relationship between a subsidiary and an associate of the same entity, in the individual or separate financial statements of both the subsidiary and the associate.
  • the removal, from the definition of a related party, of situations in which two entities are related to each other because a person has significant influence over one entity and a close member of the family of that person has significant influence over the other entity.
  • the inclusion, within the definition of a related party, of two entities where one is an investee of a member of key management personnel (KMP) and the other is the entity managed by the person that is a member of KMP.


Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.