Purpose of the standard

Learning objectives

• Explain why related party disclosures are required (possible effect on financial position and profit or loss).L1

Normative references

• IAS 24 §1Objective: to ensure that an entity's financial statements contain the disclosures necessary to draw attention to the possibility that its financial position and profit or loss may have been affected by the existence of related parties and by transactions and outstanding balances, including commitments, with such parties.
• IAS 24 §5Related party relationships are a normal feature of commerce and business: entities frequently carry on parts of their activities through subsidiaries, joint ventures and associates, over which they may exert influence through control, joint control or significant influence.

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

2 questions

• The objective of IAS 24 is to require disclosure that signals the possible effect of related parties, and of their transactions and balances, on the entity's financial position and profit or loss.L1
• Why must financial statements provide information about related parties?L1