What Is a Related Party Under IAS 24?

A related party, under IAS 24, is a person or entity that is connected to the reporting entity in a way that could influence, or be influenced by, that entity. The standard doesn't stop related-party transactions — it requires them to be disclosed, so users understand that the numbers may not reflect arm's-length dealing.

Who counts as a related party?

• Parents, subsidiaries and fellow group members.
• Associates and joint ventures.
• Key management personnel of the entity or its parent.
• Close family members of those individuals.
• Entities controlled or significantly influenced by any of the above.

Why does disclosure matter?

Related-party relationships can affect the reported results and position — for example, a sale to a group company at a non-market price. Disclosure alerts users to the possibility that transactions weren't at arm's length, protecting the usefulness of the financial statements.

What must be disclosed?

IAS 24 requires disclosure of the relationship, the nature and amount of transactions, outstanding balances, and key management personnel compensation — regardless of whether a price was charged.

In SBR, related-party questions reward applying IAS 24 to the specific scenario — identifying who the related party is and what must be disclosed. Practising these and marking them against the official ACCA scheme with The 50% Club shows you exactly how to turn the standard into scoring points.