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Professional fileIAS 24L4 · Expert

Related party file of a group: mapping, key management compensation, transactions and balances, State (IAS 24)

9 documents17 tasks≈ 300 min
0 / 21 items completed
Standards
IAS 24 — Related Party Disclosures
Assistance levelFree workspace · autonomous situation
  • Method: withdrawn
  • Checklist: withdrawn
  • Hints: withdrawn
  • Step-by-step work: withdrawn

Case brief

Situation

Telmar Industries SA (fictitious entity) is preparing its financial statements of 31 December 20X6. The file covers four parts: the map of related parties (the chief executive Mr Rémi Cassard, his mother Ms Odile Cassard, his brother Mr Hugo Cassard, Cassard Logistique SARL which he controls, the plan Telmar Retraite, Gestion Ardenne SAS which provides the chief financial officer, and the Republic of Zorvane); the compensation of the managers; the transactions and balances with Cassard Logistique SARL; the relationship with the State. As the preparer, you document each judgement; a reviewer then checks the file. Teaching simulation: the review trail of the file (preparation, reviewer notes and final sign-off) is simulated for demonstration purposes; it is neither a real review nor a validation of the content.

Your assignment

As the preparer of the file: assess the case of Ms Odile Cassard and Mr Hugo Cassard, justify the substance of the other relationships and draw up the map; compute the total compensation of the managers, state the amount incurred with the management entity and record the short-term expense; compute the transport invoiced by Cassard Logistique SARL and record it; recompute the allowance on the receivable, its net balance and record the expense; assess arm's length and aggregation; compute the sales with the State group and judge the extent of disclosure; present the effect of the three entries; conclude.

You prepare a complete file: documents, work, entries and conclusion, then compare your work with the solution and the review points of the file.

Autonomous professional situation

As on a real engagement: no method, no checklist and no hints. You identify the issues yourself, organise the work and defend your conclusion.

  • Organise the work
  • Document each point
  • Argue the conclusion

Documents

File documents

9 documents: open each one to read it.

Document 1Table

Links identified

Links identified at 31 December 20X6: Mr Rémi Cassard is chief executive of the entity and controls Cassard Logistique SARL, which provides the entity with transport services and buys used equipment from it. Telmar Retraite is the retirement plan of the entity employees. Gestion Ardenne SAS provides the entity with the services of its chief financial officer. The Republic of Zorvane holds a golden share and sits on the board: it has significant influence over the entity (case data).

Data

Key data from the documents

The figures of the documents, gathered for your work.

ItemValueFound in
Short-term benefits€520,000.00
Post-employment benefits€70,000.00
Other long-term benefits€25,000.00
Termination benefits€30,000.00
Share-based payment€95,000.00
Fees of the management entity€210,000.00
Contributions to the retirement plan€150,000.00
Transport invoice A€31,000.00
Transport invoice B€29,000.00
Transport invoice C€25,000.00
Gross balance of the receivable€64,000.00
Opening allowance€2,000.00
Allowance expense of the year€5,000.00
Receivables written off€1,000.00
Closing allowance recorded€6,000.00
Contract with Zorvane Énergie SA€400,000.00
Other sales of 20X6€2,000,000.00
Proportion made with the State and its entities (in %)25%
Balance of the loan to the chief executive€40,000.00
Head office moving costs€15,000.00

Sorting the information

Not every document matters: identify those that affect the accounting treatment.

Part 1 · Classification · Analysis

Sort each document: does it affect the accounting treatment?

Drag each item into its category, or tap the category under the item.

To sort9

  • Links identified

  • Facts about relatives

  • Compensation of the employed managers

  • Contracts and plan

  • Invoices of Cassard Logistique SARL

  • Statement of the receivable from Cassard Logistique SARL

  • Management note on the terms

  • Relationships with the State

  • Moving costs

Relevant to the treatment0

    No effect0

      Workspace

      Work programme

      Organise your work freely: deal with each point, then argue your conclusion.

      1. Task 1Analysis

        What is the situation of each person and entity and which workpaper applies?

      2. Task 2Professional judgement

        Are Ms Odile Cassard and Mr Hugo Cassard close family members to retain? Justify.

      3. Task 3Professional judgement

        Are Cassard Logistique SARL, Telmar Retraite, Gestion Ardenne SAS and the Republic of Zorvane related? What substance?

      4. Task 4Analysis

        Draw up the map: number of related parties retained and excluded.

        Calculator

        Click in an answer field to be able to insert the result.

        Part 1 · Calculation

        Draw up the map: number of related parties retained and excluded.

        1. units
        2. units

        Checks

        • 0 / 2 steps entered
        • Amounts readable

        Result: Parties excluded

      5. Task 5Calculation

        Compute the total compensation of the employed managers as the sum of the five categories.

        Calculator

        Click in an answer field to be able to insert the result.

        Part 1 · Calculation

        Compute the total compensation of the employed managers as the sum of the five categories.

        1. €

        Checks

        • 0 / 1 step entered
        • Amounts readable

      6. Task 6Professional judgement

        How to treat the services of Gestion Ardenne SAS and what amount to disclose?

        Calculator

        Click in an answer field to be able to insert the result.

        Part 1 · Calculation

        How to treat the services of Gestion Ardenne SAS and what amount to disclose?

        1. €

        Checks

        • 0 / 1 step entered
        • Amounts readable

      7. Task 7Journal entries

        Record the short-term compensation expense payable.

        Calculator

        Click in an answer field to be able to insert the result.

        Part 1 · Journal entry · Journal entries

        Entry 1 of 1

        One line = one account and one side. Add a line if the entry needs more; the balance check updates live.

        1. Line 1

        2. Line 2

        TotalsDebit0Credit0

      8. Task 8Calculation

        Compute the total transport invoiced by Cassard Logistique SARL.

        Calculator

        Click in an answer field to be able to insert the result.

        Part 1 · Calculation

        Compute the total transport invoiced by Cassard Logistique SARL.

        1. €

        Checks

        • 0 / 1 step entered
        • Amounts readable

      9. Task 9Journal entries

        Record the transport services received.

        Calculator

        Click in an answer field to be able to insert the result.

        Part 1 · Journal entry · Journal entries

        Entry 1 of 1

        One line = one account and one side. Add a line if the entry needs more; the balance check updates live.

        1. Line 1

        2. Line 2

        TotalsDebit0Credit0

      10. Task 10Calculation

        Recompute the closing allowance and check it.

        Calculator

        Click in an answer field to be able to insert the result.

        Part 1 · Calculation

        Recompute the closing allowance and check it.

        1. €
        2. €

        Checks

        • 0 / 2 steps entered
        • Amounts readable

        Result: Control difference

      11. Task 11Calculation

        Compute the net balance of the receivable.

        Calculator

        Click in an answer field to be able to insert the result.

        Part 1 · Calculation

        Compute the net balance of the receivable.

        1. €

        Checks

        • 0 / 1 step entered
        • Amounts readable

      12. Task 12Journal entries

        Record the allowance expense.

        Calculator

        Click in an answer field to be able to insert the result.

        Part 1 · Journal entry · Journal entries

        Entry 1 of 1

        One line = one account and one side. Add a line if the entry needs more; the balance check updates live.

        1. Line 1

        2. Line 2

        TotalsDebit0Credit0

      13. Task 13Professional judgement

        Can arm's length be stated for the transport, and may the three invoices be aggregated? Justify.

      14. Task 14Calculation

        Compute the sales made with the Republic of Zorvane and its entities.

        Calculator

        Click in an answer field to be able to insert the result.

        Part 1 · Calculation

        Compute the sales made with the Republic of Zorvane and its entities.

        1. €

        Checks

        • 0 / 1 step entered
        • Amounts readable

      15. Task 15Professional judgement

        What disclosure to keep despite the exemption, and does it concern the loan to the chief executive?

      16. Task 16Effects on the financial statements

        What is the effect of the three entries of the file on the financial statements?

        Part 1 · Classification · Analysis

        State the direction of the effect on each financial statement aggregate.

        1. Financial position (balance sheet)

        2. Profit or loss

        3. Other comprehensive income

        4. Equity

        Calculator

        Click in an answer field to be able to insert the result.

        Part 2 · Calculation · Analysis

        Quantify the effect on the aggregates concerned.

        1. €
        2. €
        3. €

        Checks

        • 0 / 3 steps entered
        • Amounts readable

        Result: Amount of the effect — Equity

      17. Task 17Conclusion

        Write the conclusion of the file.

      File review

      Points raised during the review of this file: read them as the preparer would.

      Review notes

      • BlockingResolvedReviewer note: justify in writing the decision on Ms Odile Cassard
      • Non-blockingOpenReviewer note: document in the note the absence of independent quotes

      Information requests

      • ObtainedRequest: role of Ms Odile Cassard
      • Assumption documentedRequest: quotes from independent carriers

      Completion checklist

      • Related party map documentedDone
      • Compensation and management entity dealt withDone
      • Transactions, balances and allowance checkedDone
      • Arm's length and aggregation reasonedDone
      • State: exemption, limits and extent dealt withDone
      • Judgements and assumptions for the engagement reviewer to confirmTo review

      Your working draft for this file: points noted, leads, intermediate calculations.

      Saved on this device only; never graded.

      Conclusion

      Submission and solution

      Complete every item of the file to submit it (0 / 21).

      Document this file

      These working papers use the data and results of this case.

      Normative references

      • IAS 24 §9
      • IAS 24 §10
      • IAS 24 §17
      • IAS 24 §17A
      • IAS 24 §18A
      • IAS 24 §18
      • IAS 24 §25