CPA Ireland have sample sets of financial statements on the website which will be supportive in assisting with appropriate note disclosures of related party transactions.

If an entity has related party transactions, it shall disclose the nature of the related party relationship as well as information about the transactions, outstanding balances and commitments necessary for an understanding of the potential effect of the relationship on the financial statements.

At a minimum, disclosures shall include:

(a) The amount of the transactions.

(b) The amount of outstanding balances 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 uncollectible receivables related to the amount of outstanding balances.

(d) The expense recognised during the period in respect of bad or doubtful debts due from related parties.

These disclosures also include key management personnel compensation.

An entity shall disclose key management personnel compensation in total, however if key management personnel and directors are the same, directors’ remuneration (or equivalent) is exempt from disclosure unless the entity is subject to a legal or regulatory requirement to disclose.

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 of the entity. Compensation includes all employee benefits including those in the form of share-based payments. Employee benefits include all forms of consideration paid, payable or provided by the entity, or on behalf of the entity in exchange for services rendered to the entity. It also includes consideration paid on behalf of a parent of the entity in respect of goods or services provided to the entity.

The objective of IAS 24 is to ensure that financial statements contain the necessary disclosures to draw attention to the possibility that a reporting entity’s financial position and profit or loss may have been affected by the existence of related parties and by transactions and outstanding balances with such parties.

Related party transactions are the transfer of resources, services or obligations between related parties regardless of whether a price is charged. Where there are transactions between a parent and subsidiary, the entity must disclose the name of its parent and if different the ultimate controlling party.

If there have been transactions between related parties, it is necessary to disclose within the financial statements the nature of the related party relationship as well as information about the transactions and outstanding balances. These disclosures are made separately for each category of related parties and include:

• The amount of the transactions
• The amount of outstanding balances, including terms and conditions and guarantees
• Provisions for doubtful debts related to the amount of open balances
• The expense during the period for bad or doubtful debts due from related parties