Substance over form

Learning objectives

• Assess the substance of a possible related party relationship; no numerical threshold is set.L1, L2, L3, L4

Normative references

• IAS 24 §10In considering each possible related party relationship, attention is directed to the substance of the relationship and not merely its legal form.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

2 questions

• To assess each possible related party relationship, the entity relies on the legal form of the relationship.L1
• Sylvain Aubert is chief executive of Brisa SA and a member of its key management personnel. The shares of Nautis, a supplier of Brisa, are registered in the name of his sister-in-law; in practice, Sylvain gives Nautis its management instructions and signs its contracts. Write a note determining whether Nautis should be examined as a possible related party of Brisa, separating case facts, rule and judgement.L3