|
Related
Party Disclosures
Objective
:
To
establish requirements for : -
- Disclosure
of related party relationships.
- Disclosure
of transactions between a reporting enterprise and
its related parties.
As-18
Related Party Disclosures
|
Issuing
Authority:
|
The
Institute of Chartered Accountants of India.
|
|
Effective
from:
|
Accounting
periods starting on or after 1.4.2001
|
|
Nature:
|
Mandatory
|
Scope:
Applies to: the financial statements of each
reporting enterprise, and the consolidated financial
statements by a holding company.
Does not apply: in circumstances where disclosure
would conflict with reporting enterprise's duties of
confidentiality, as specifically required in terms of
statute or by any other regulator or similar competent
authority.
State-controlled enterprises are not required to disclose
transactions with other state owned enterprise, and
Intra-group transactions are not required to be disclosed
in consolidated financial statements.
Related
party relationships:
The Accounting
Standard applies to only the following related party
relationships:
- An
enterprise controlling the reporting enterprise directly
or indirectly through intermediaries
- An
enterprise controlled - directly or indirectly through
intermediaries by the reporting enterprise.
- An enterprise
under common control with the reporting enterprise.
- Associates
and joint ventures of the reporting enterprise
- Investing
party or venturer in the associates and joint ventures
of reporting enterprise
Individual
and relatives of any such individual owning directly
or indirectly voting power that gives them control
or significant influence over the enterprise.
- Key
management personnel and their relatives.
- Enterprise
over which such individual or key personnel are able
to exercise significant influence.
Note: Control refers to:
- >
50% ownership
- Control
of the composition of governing body
-
Direct appointment
- Appointment
by virtue of position in the controlling enterprise
- Nomination
- Substantial
interest in voting power (> 20%) and the power
to direct by statute or agreement the financial
and/or operating policies
Significant
Influence refers to participation in financial and
operating policies but not control of those policies
The
Accounting Standard does not apply to the following
related party relationships:
- Two
companies simply because they have a director in common.
- single
customer, supplier, franchiser, distributor merely
by virtue of resulting economic dependence
- Providers
of finance, trade unions, public utilities or government
departments, in their dealing in normal course of
business.
Disclosure
requirements
- Even
if there is no transaction but control exists:
- Name
of the related party and
- Nature
of related party relationship.
- If there
are transactions:
- Name
of the related party
- Nature
of relationship.
- Description
of nature of transactions.
-
Volume of the transactions.
- Amount
outstanding at the Balance Sheet date.
- Amount
provided in respect of doubtful debts, written
off, written back during the year.
- Any
other element as may be necessary for better understanding
of financial statements.
Disclosure
Requirements of Schedule VI to the Companies Act, 1956
Balance
Sheet
- Loans
(Secured as well as unsecured) from directors and
managers.
- Where
loans (secured as well as unsecured ) have been guaranteed
by managers and / or directors, a mention thereof
and aggregate amount under each head.
- Calls
unpaid by directors.
- Loans
and advances (secured & unsecured) from subsidiaries.
- Amount
due to subsidiaries (sundry creditors).
- Amount
of any guarantee given by the company on behalf of
directors or other officers of the company.
- Current
accounts (debit or credit) with directors and managers.
- Investment
in shares, debentures or bonds of subsidiary companies.
- Debts
due by directors or officers of the company or any
of them either
severally or jointly with other person.
- Debts
due by firms or private companies respectively in
which director is a partner or a director or a member.
- Debts
due from other companies under the same management
with their names and maximum amount due at any time
during the year.
- Advances
and loans to subsidiaries or to partnership firms
in which the company or any of its subsidiaries is
a partner.
- Investment
in bodies corporate under the same management.
Profit
& Loss Account
- Amount
of interest on company's loans and debentures paid
to directors or manager.
- Dividend
from subsidiary companies.
- Provision
for losses of subsidiary companies.
- Detailed
information of payment of managerial remuneration,
perquisites, benefits, allowances or commission, pension,
gratuities, payments for provident fund to the directors
or manager, and
- Details
of calculation of net profit and commission payable
to directors.
Differences
between IAS, USGAAP & AS
|
IAS
|
FAS
|
AS
|
| Disclosure
of all transactions |
Disclosure
of material related party transactions |
Disclosure
of related party transactions |
|
IAS
- 24
|
FAS
- 57
|
AS
- 18
|
| A
substantial interest investing power and the power
to direct by agreement the financial / operating
policies. |
Control
includes possession of the power to direct or cause
the direction of management & policies by contract. |
A
substantial interest investing power and the power
to direct by agreement the financial / operating
policies. |
| At
any point of time one party has the ability to control
the other. |
No
such reference. |
At
any point of time one party has the ability to control
the other. |
|
