Wiley IFRS 2014: Interpretation and Application of International Financial Reporting Standards

Chapter 29RELATED-PARTY DISCLOSURES

1. INTRODUCTION
2. DEFINITIONS OF TERMS
3. IDENTIFICATION
   1. The Need for Related-Party Disclosures
   2. Scope of the Standard
   3. Applicability
   4. Substance over Form
   5. Significant Influence
4. DISCLOSURES
   1. Financial Statement Disclosures
   2. Disclosure of Parent-Subsidiary Relationships
   3. Disclosures to Be Provided
      1. Arm's-length transaction price assertions
      2. Aggregation of disclosures
      3. Compensation
   4. Government-Related Entities
5. EXAMPLES OF FINANCIAL STATEMENT DISCLOSURES
6. US GAAP COMPARISON

INTRODUCTION

Transactions between entities that are considered related parties, as defined by IAS 24, Related-Party Disclosures, must be adequately disclosed in financial statements of the reporting entity. Such disclosures have long been a common feature of financial reporting, and most national accounting standard-setting bodies have imposed similar mandates. The rationale for compelling such disclosures is the concern that entities which are related to each other, whether by virtue of an ability to control or to exercise significant influence (both as defined under IFRS) usually have leverage in the setting of prices to be charged and on other transaction terms. If these events and transactions were simply mingled with transactions conducted with customers or vendors on normal arm's-length terms, the users of the financial statements would likely be impeded in their ability to project future earnings and cash flows for the reporting entity, given that related-party transaction terms ...