Chapter 24Related Parties
- Introduction
- Issues Relating to Directors
- Definition and Identification of a Related Party
- Transactions with Related Parties
- Exemption from Disclosure of Related Party Transactions
- Controlling Parties
- Companies Act 2006
- Directors' Remuneration and Other Benefits
- Directors' Advances, Credits and Guarantees
Introduction
The concept of related parties can be very complicated for some companies – particularly much larger, more complex entities that have a wide range of activities. Section 33 Related Party Disclosures deals with the disclosures that are needed where related party transactions are entered into during a reporting period. The overarching objective of Section 33 is to ensure that the financial statements contain sufficient narrative to ensure that users' are aware of the possibility that the reported financial position and performance has been affected by the existence of related parties and transactions with those related parties. Section 33 is a wholly disclosure standard.
Related party issues are also covered in the Companies Act 2006 – for example, where transactions with directors are concerned. As a result, directors' transactions that fall under the scope of the Companies Act 2006 must also be disclosed in the abbreviated financial statements of companies that are submitted to Companies House and included on the public record.
Related party transactions have proved to be problematic for both companies and auditors over the years. This ...
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