Difference between Ind AS 24 on Related Party Disclosures and the existing AS 18 (Issued 2000) on Related Party Disclosures

(i) Existing AS 18 uses the term “relatives of an individual”, whereas Ind AS 24 uses the term “a close member of that person’s family”. Definition of close members of family as per Ind AS 24 includes the persons specified within the meaning of ‘relative’ under the Companies Act 1956 and that person’s domestic partner, children of that person’s domestic partner and dependants of that person’s domestic partner. However, the existing AS 18 covers the spouse, son, daughter, brother, sister, father and mother who may be expected to influence, or be influenced by, that individual in his/her dealings with the reporting enterprise. Hence, the definition as per Ind AS 24 is much wider.(Paragraph 3 of existing AS 18 and paragraph 9 of Ind AS 24).

(ii) Existing AS-18 defines state-controlled enterprise as “an enterprise which is under the control of the Central Government and/or any State Government(s)”. However, in Ind AS 24, there is extended coverage of Government Enterprises, as it defines a government-related entity as “an entity that is controlled, jointly controlled or significantly influenced by a government.” Further, “Government refers to government, government agencies and similar bodies whether local, national or international.” (paragraph 10 of existing AS 18 and paragraph 9 of Ind AS 24)

(iii) Existing AS 18 covers key management personnel (KMP) of the entity only, whereas, Ind AS 24 covers KMP of the parent as well. (Paragraph 3 of existing As 18 and paragraph 9 of Ind AS 24)

(iv) Under Ind AS 24 there is extended coverage in case of joint ventures. Two entities are related to each other in both their financial statements, if they are either co-venturers or one is a venturer and the other is an associate. Whereas as per existing AS 18, co-venturers or co-associates are not related to each other.

(v) Existing AS 18 mentions that where there is an inherent difficulty for management to determine the effect of influences which do not lead to transactions, disclosure of such effects is not required whereas Ind AS 24 does not specifically mention this. (paragraph 18 of existing AS 18)

(vi) Existing AS 18 does not specifically cover entities that are post employment benefit plans, as related parties. However, Ind AS 24 specifically includes post employment benefit plans for the benefit of employees of an entity or its related entity as related parties.

(vii) Ind AS 24 requires an additional disclosure as to the name of the next most senior parent which produces consolidated financial statements for public use, whereas the existing AS-18 has no such requirement. (paragraph 13 of Ind AS 24)

(viii) Ind AS 24 requires extended disclosures for compensation of KMP under different categories, whereas the existing AS 18 does not specifically require. (paragraph 17 of Ind AS 24)

(ix) Ind AS 24 requires “the amount of the transactions” need to be disclosed, whereas existing AS 18 gives an option to disclose the “Volume of the transactions either as an amount or as an appropriate proportion”. (paragraph 23(iv) of existing AS 18 and paragraph 18 (a) of Ind AS 24)

(x) Ind AS 24 requires disclosures of certain information by the government related entities, whereas the existing AS 18 presently exempts the disclosure of such information. (paragraph 25 of Ind AS 24 and paragraph 9 of existing standard)

(xi) Existing AS 18 includes clarificatory text, primarily with regard to control, substantial interest (including 20% threshold), significant influence (including 20% threshold). However, Ind AS 24 does not include such clarificatory text and allows respective standards to deal with the same. (ICAI)