[Identification, Audit & Disclosure Checklist] of RPTs and Relationships under AS 18 & Ind AS 24
- Account & Audit|Blog|News|
- 2 Min Read
- By Taxmann
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- Last Updated on 26 May, 2023
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From the point of view of accounting, a related party refers to an individual or entity that has the ability to influence the actions or decisions of another entity. This influence can arise from a variety of relationships, including ownership interests, common management, or family ties. Related parties can significantly impact an entity’s financial and operational affairs, which is why transactions with related parties and their relationships are closely regulated and required to be reported under various provisions.
I. Related Party as per AS 18
Two parties are considered to be related if at any time during the reporting period one party has the ability to control the other party or exercise significant influence over the other party in making financial and/or operating decisions.
II. Related Party as per Ind AS 24
A related party is a person or entity that is related to the entity that is preparing its financial statements (referred as ‘reporting entity’) if it has control or joint control of the reporting entity, or has significant influence over the reporting entity, or is a member of the key management personnel of the reporting entity or of a parent of the reporting entity.
III. Disclosure
In order to comply with the provisions of Ind AS 24 and AS 18, entities are required to make certain disclosures on related party transaction, relationships and balances. It is the responsibility of entities to ensure adequacy and accuracy of related party disclosure along with compliance with the relevant reporting framework. To ensure all necessary disclosures under Ind AS 24 and AS 18 entities may use the given checklist:
a) Has the company disclosed,
(i) Name of the related party and
(ii) Nature of the related party relationship
b) Whether the company has made the statutory disclosures of transactions with certain categories of related parties
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