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AASB 124 - Related Party Disclosures

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Summary 
Developments, Key Differences & History 
Compared to IFRS 
Interpretations 
Rejection Notices 
Questions & Answers 
Articles 
AASB website 

 
IFRIC Rejections and Guidance
  1. September 2004 - Disclosure of emoluments to key management personnel 
  2. September 2004 - Interpretation of the term ‘information’ in IAS 24 paragraph 17 
  3. May 2004 - Identifying and disclosing related party transactions by state-owned business entities
 
1. September 2004 - Disclosure of emoluments to key management personnel 
 
Issue:  
 
Paragraph IN5 of IAS 24 (as revised in 2003) states that a main change in IAS 24 (2003) from the previous version (1994) was that “The Standard requires disclosure of the compensation of key management personal”. The IFRIC was asked to consider whether, based on this introductory remark, it was possible to infer that IAS 24 (1994) did not require disclosure of compensation of key management personnel.  
 
IFRIC Decision: 
 
The IFRIC noted that the comments in the Introduction of IAS 24 (2003) were made to highlight explicitly that disclosure of key management personnel was required, given that the 2002 Exposure Draft had proposed eliminating this disclosure. This was not a change from the requirements of IAS 24 (1994). IAS 24 (1994) had no specific exemption for the disclosure on management compensation. Accordingly, IAS 24 (1994) required an entity to disclose key management personnel compensation, given they met the definition of a related party. No interpretation was considered necessary.  
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2. September 2004 - Interpretation of the term ‘information’ in IAS 24 paragraph 17 
 
Issue:  
 
The IFRIC was asked to supplement the minimum disclosures in paragraph 17 regarding “transactions and outstanding balances necessary for an understanding of the potential effect of [related party] relationships on the financial statements”. For example, it was suggested that an interpretation of paragraph 17 should specifically require disclosure of the purpose and economic substance of transactions, identity of related parties, extend of management involvement, special risks and the effect of such transactions on the financial statements.  
 
IFRIC Decision: 
 
The IFRIC agreed not to add this issue to its agenda, noting that the IASB, in its revisions to IAS 24 in 2003, debated the extent of specific minimum disclosure requirements and the suggested items were not included. The IFRIC did agree that, because of wider policy considerations, this issue might be appropriate for discussion at the Board and, perhaps, the Standards Advisory Council.  
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3. May 2004 - Identifying and disclosing related party transactions by state-owned business entities 
 
Issue:  
 
The issue concerned the practical difficulty for some entities, especially government business entities, in identifying and disclosing related party transactions. 
 
IFRIC Decision:  
 
The IFRIC agreed that the issue was one of detailed application, rather than principle, and that there was little scope for the IFRIC to issue a useful Interpretation consistent with IAS 24. Accordingly, the IFRIC declined to add the topic to its agenda.  
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