Reporting Related Parties
In This Chapter
Understanding what a related party is
Bringing the family into the mix
Piecing together pensions issues
Dealing with disclosures
When put together, the words related and parties create one of the most common causes of headaches for accountants and auditors. Related parties are people or companies related to a company. A related party relationship exists when one party has the ability to control, or exercise significant influence over, the other party in terms of making financial and operating decisions.
Related party transactions can have a significant impact on an organisation’s financial statements from the viewpoint of potential investors and others, like the tax authorities. For this reason, the International Accounting Standards Board (IASB) issued IAS 24 Related Party Disclosures, which is wholly a disclosure standard. You apply this standard to do the following:
Identify related party relationships as well as the transactions ...