Ind AS 24 related party disclosures are easiest to get wrong when the finance team starts from the ledger instead of the relationship map. A related-party note is not simply a list of transactions with group companies. The reporting entity first identifies relevant persons and entities, then captures transactions, outstanding balances and commitments, and prepares relationship and compensation disclosures. ICAI's 2026 Educational Material announcement on Ind AS 24 explains the standard's transparency objective, while the ICAI publication page for the Educational Material provides a current professional reference.
Step 1: Build the related-party universe before reviewing transactions
Start with ownership, control and influence rather than vendor and customer names. A person or a close member of that person's family can be related when the person has control or joint control, has significant influence, or is key management personnel of the reporting entity or its parent. The entity-side tests also extend beyond subsidiaries to specified group, associate, joint-venture, post-employment benefit plan and person-controlled relationships.
The practical population should therefore be built from the legal-entity chart, shareholder and investment records, Board and management records, declarations from relevant persons, and information about entities controlled or jointly controlled by those persons. ICAI's Financial Reporting study unit on Ind AS 24 stresses substance over legal form, so labels alone are not enough.
Step 2: Identify KMP and close-family connections correctly
Key management personnel are persons having authority and responsibility for planning, directing and controlling the entity, directly or indirectly. The definition expressly includes a director, whether executive or otherwise, so a non-executive label should not be used as an automatic reason to exclude a director from the KMP assessment. Ind AS 24 also treats KMP of the reporting entity's parent as relevant to related-party identification.
Close members of the family are those who may be expected to influence, or be influenced by, the person in dealings with the entity. ICAI's study material identifies relationships including children, spouse or domestic partner, brother, sister, father and mother. A year-end process should refresh both the KMP list and the family and controlled-entity declarations needed to identify indirect relationships.
Step 3: Remember that some relationship disclosures exist even without transactions
Ind AS 24 requires disclosure of parent-subsidiary relationships even when there have been no related-party transactions. The reporting entity discloses the name of its parent and, if different, the ultimate controlling party. If neither produces consolidated financial statements available for public use, the next most senior parent that does so is also identified. A zero-transaction year therefore does not automatically mean a zero-disclosure year.
Step 4: Capture the full disclosure data when transactions occur
Where related-party transactions occurred, the disclosure goes beyond the transaction value. At a minimum, the entity should capture the nature of the relationship, transaction amounts, outstanding balances including commitments, the terms and conditions of those balances, whether they are secured, the nature of consideration to be provided in settlement, and details of guarantees given or received. The standard also requires information about provisions for doubtful debts and the expense recognised for bad or doubtful debts due from related parties.
Amounts are disclosed separately for relevant categories such as the parent, entities with joint control or significant influence, subsidiaries, associates, joint ventures, KMP of the entity or its parent, and other related parties. Similar items may be aggregated when that does not obscure the effect of the transactions, but unlike transactions should not be compressed merely to shorten the note.
Step 5: Prepare KMP compensation as its own workstream
Ind AS 24 requires KMP compensation in total and by five categories: short-term employee benefits, post-employment benefits, other long-term benefits, termination benefits and share-based payments. Finance teams should reconcile the KMP population to payroll, director-fee records, employee-benefit workings and share-based payment schedules.
A separate management entity can also create a related-party issue. An entity, or a member of a group of which it is part, can be related when it provides KMP services to the reporting entity or its parent. Amounts incurred by the reporting entity for KMP services supplied by a separate management entity are specifically disclosed.
Worked example: why a relationship map catches more than the ledger
Assume Beta Ltd applies Ind AS and is a subsidiary of Alpha Ltd. Ms R is KMP of Alpha Ltd. Beta should include Ms R in its related-party assessment because KMP of the parent falls within the person-related test. If Ms R controls Consulting Co and Consulting Co provides advisory services to Beta, Beta should test Consulting Co under the entity-related conditions rather than treating it as an ordinary vendor merely because its invoice was processed through procurement.
If the relationship qualifies, Beta's disclosure process should capture the service amount, the closing payable or other outstanding balance, any commitments, relevant terms and conditions, and guarantees if applicable. The vendor name alone would not reveal the connection to the parent's KMP.
Arm's-length pricing does not remove disclosure
A related-party transaction does not cease to require disclosure merely because it was priced on market terms. Further, a statement that terms were equivalent to arm's-length terms should be made only when the entity can substantiate it. The close file should therefore answer two separate questions: whether the party is related, and whether any statement about pricing can actually be supported.
Government-related entities: targeted relief, not a blanket exemption
Ind AS 24 contains a disclosure exemption for specified transactions and balances with a government that controls, jointly controls or significantly influences the reporting entity, and with another entity related because the same government has such power over both. If the exemption is used, disclosure does not disappear. The entity still identifies the government and the nature of the relationship, discloses the nature and amount of each individually significant transaction, and gives a qualitative or quantitative indication of other transactions that are collectively significant.
Year-end Ind AS 24 checklist
- Refresh the legal-entity map. Capture changes in parents, subsidiaries, associates, joint ventures and other relevant investments.
- Refresh person declarations. Update KMP, parent-KMP, close-family and controlled-entity information.
- Map parties to master data. Link the related-party population to customer, vendor, employee, loan and investment records.
- Search beyond invoices. Review loans, guarantees, commitments, asset transfers, services and other transfers of resources or obligations.
- Reconcile flows and balances. Transaction totals and year-end balances answer different disclosure questions.
- Prepare KMP compensation by category. Reconcile payroll, fees, benefits and share-based payment records.
- Document terms and guarantees. Capture security, settlement terms and guarantees where required.
- Substantiate arm's-length wording. Avoid unsupported boilerplate.
- Apply government-related relief carefully. Document eligibility and the residual disclosures.
Practical takeaway
A reliable Ind AS 24 process works in this order: identify relationships, connect them to the accounting population, capture transactions and balances, then build the note and KMP compensation disclosures. A maintained relationship register is far more reliable than reconstructing the population from the general ledger after year-end.
