Interpretation and Application of IPSAS

6 Disclosure Standards

This chapter presents two disclosure standards: one which is mandatory, namely IPSAS 20 on Related Party Disclosures and one that is voluntary, namely IPSAS 22 on the Disclosure of Financial Information about the General Government Sector.

Related Party Disclosures

The objective of IPSAS 20 is to require the disclosure of the existence of related party relationships where control exists. IPSAS 20 related party disclosures therefore ensure that an entity's financial statements contain the disclosures necessary to draw attention to the possibility that its financial position, and financial performance, may have been affected by the existence of related parties and by related party transactions. Knowledge of related party transactions, any outstanding balances with a related party, and the nature of related party relationships may affect the assessment of an entity's operations by users of the financial statements. Not only does IPSAS 20 require disclosure on transactions with key management personnel, for example the directors or board members, but it also stipulates that key information about the rewards and incentives available to them are clearly set out in the financial statements. Such assessments are likely to include the risks and opportunities facing an entity.

IPSAS 20 does not contain any recognition or measurement requirements; they merely require disclosure in the financial statements of the nature of related party relationships and of certain ...