What is Related Party Disclosure?
Related party disclosure is the requirement to disclose transactions and balances with parties that are related to the reporting entity, such as parents, subsidiaries, key management personnel or entities under common control. Under IAS 24, disclosure must cover the nature, amount, terms and any guarantees.
How It Works
- Identify all related parties under IAS 24’s definition.
- Capture transactions and outstanding balances with each.
- Disclose by category (parent, subsidiary, associate, key management).
- Include compensation of key management personnel in aggregate.
Saudi Context
Saudi CMA rules require Tadawul-listed companies to disclose related party transactions in detail, with material transactions also requiring board and sometimes shareholder approval.
Example
A subsidiary purchases inventory from a parent company at cost plus 5 percent. The amount, terms and outstanding balance must be disclosed in the IAS 24 note.