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Financial Reporting · Ind AS 24 Related Party Disclosures

Ind AS 24: Key Management Personnel and Compensation Disclosure

Updated 5 October 2026 · Fact-checked

Key management personnel (KMP) are people with authority and responsibility for planning, directing and controlling the entity's activities, directly or indirectly, including any director, executive or otherwise. Ind AS 24 requires you to disclose KMP compensation in total and separately for five categories: short-term benefits, post-employment benefits, other long-term benefits, termination benefits and share-based payment.

Understand Key Management Personnel and Compensation Disclosure

Ind AS 24 exists because related parties can influence an entity's results. Senior managers are one such group. Users of financial statements want to know what the entity pays the people who run it.

Key management personnel (KMP) are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity. The test is about authority, not job title. A non-executive or independent director is KMP under this definition, because the definition names any director. Under the Companies Act, 2013, KMP is a narrower, separate term (such as CEO, CFO, company secretary, whole-time directors), so do not mix the two in an Ind AS 24 answer.

Compensation includes all employee benefits as defined in Ind AS 19, and also share-based payment under Ind AS 102. Employee benefits are all forms of consideration paid, payable or provided by the entity, or on its behalf, in exchange for services rendered to the entity. It covers amounts paid by a parent or another entity for services to the reporting entity. It also includes benefits in kind, not just cash.

The five categories are: (a) short-term employee benefits, such as wages, salaries, social security contributions, paid annual leave, paid sick leave, profit-sharing and bonuses payable within twelve months after the period end, and non-monetary benefits such as medical care, housing, cars and free or subsidised goods or services for current employees; (b) post-employment benefits, such as pensions, other retirement benefits, post-employment life insurance and medical care; (c) other long-term employee benefits; (d) termination benefits; and (e) share-based payment.

The disclosure is of KMP compensation in total and for each of these categories. Separately, if there were transactions with KMP, such as loans or sale of goods, these are disclosed as related party transactions, and they are not part of compensation. Where the entity gets KMP services from another entity (a management entity), the amount incurred for those services is disclosed, but the entity need not apply the category breakdown to it.

Key rules to remember

Definition of KMP
KMP = persons with authority and responsibility for planning, directing and controlling the entity's activities, directly or indirectly, including any director (executive or otherwise)
Includes independent and non-executive directors. Authority decides it, not designation.
Components of KMP compensation
Total KMP compensation = short-term benefits + post-employment benefits + other long-term benefits + termination benefits + share-based payment
Disclose the total and each category separately, for the period.
Disclosure rule
Disclose KMP compensation in total and for each of the five categories
Applies in the consolidated or separate financial statements as relevant, and to the reporting period with comparatives.
Management entity services
If KMP services are provided by another entity, disclose the amount incurred by the reporting entity for those services
The category-wise breakdown of compensation need not be given for that amount.
Compensation versus transactions
Loans, purchases, sales and similar dealings with KMP are related party transactions, not compensation
Disclose them separately with amounts, outstanding balances and terms.

How to solve Key Management Personnel and Compensation Disclosure questions

Use this method for any case on KMP and compensation disclosure.

  1. 1List every person in the case and test each against the KMP definition: authority and responsibility for planning, directing and controlling, including any director. Include independent directors.
  2. 2Exclude people who only hold a title or only a delegated, routine role with no such authority, unless the facts show real authority.
  3. 3For each KMP, list every item received: cash, benefits in kind, retirement contributions, long-term plans, exit payments, share options or shares.
  4. 4Classify each item into one of the five categories. Use Ind AS 19 for the benefit type and Ind AS 102 for share-based payment.
  5. 5Use the amount recognised as expense for the period for each item, not the cash paid. Include amounts borne by a parent or another entity on the reporting entity's behalf.
  6. 6Keep out anything that is not compensation, such as loans to a director or purchases from a KMP's firm. Route them to related party transaction disclosure.
  7. 7Add category totals and the grand total. Present the table with comparatives, and state the conclusion in provision-facts-conclusion form.

Quickest way: Three-pass sort for KMP cases

When to use it: Use when a case lists many people and many payments and you have limited time.

  1. Pass 1: tick every director and every person who clearly directs and controls activities. These are KMP.
  2. Pass 2: tag each payment with S (short-term), P (post-employment), L (other long-term), T (termination) or SBP (share-based).
  3. Pass 3: strike out loans, purchases, rent and other dealings. Total each tag and then add for the grand total.

Common mistakes in Key Management Personnel and Compensation Disclosure

  • Excluding independent or non-executive directors from KMP.

    Students link KMP to the Companies Act, 2013 list of key managerial personnel.

    Fix: Apply the Ind AS 24 definition, which says any director, executive or otherwise. Sitting fees and commission paid to them form part of compensation.

  • Showing only a single total for KMP compensation.

    Students think the total is enough.

    Fix: Give the total and each of the five categories separately.

  • Leaving out share-based payment from compensation.

    Compensation is thought of as salary and bonus only.

    Fix: Include the Ind AS 102 expense for options or shares granted to KMP as the fifth category.

  • Including loans or sales to a KMP in compensation.

    Both involve money flowing between the entity and the person.

    Fix: Compensation is consideration for services. Disclose loans and trade dealings as related party transactions.

  • Using cash paid instead of the expense for the period.

    Salary and bonus are remembered as cash items.

    Fix: Use the amount recognised as expense, including accrued bonus and post-employment cost, for the period.

  • Ignoring pay borne by a parent or another entity.

    Students look only at the reporting entity's payroll.

    Fix: Compensation includes amounts paid by a parent or any other entity in exchange for services to the reporting entity.

Worked examples

Example 1

Case: Sagar Ltd (Ind AS applicable) has these persons: Mr A, managing director; Ms B, CFO who reports to the board and controls finance activities; Mr C, independent director who receives only sitting fees; Mr D, a plant supervisor with routine duties. Identify who is KMP under Ind AS 24 and give reasons.

Show the solution
  1. Provision: KMP are persons with authority and responsibility for planning, directing and controlling the entity's activities, directly or indirectly, including any director, executive or otherwise.
  2. Mr A is a managing director, so he is a director and has such authority. He is KMP.
  3. Ms B directs and controls the finance function and is part of the senior management team. On the facts she has the required authority. She is KMP.
  4. Mr C is a director. The definition includes any director, whether executive or otherwise, so he is KMP even though he has no executive role. His sitting fees are compensation.
  5. Mr D performs routine supervisory duties and has no authority over planning, directing or controlling the entity's activities. He is not KMP.

Answer: Mr A, Ms B and Mr C are KMP. Mr D is not KMP.

Example 2

Case: For the year ended 31 March 2027, Tara Ltd's KMP received: salaries and bonus payable within twelve months ₹2,10,00,000; free housing and car valued at ₹18,00,000; employer pension contributions ₹12,00,000; long-service award accrual ₹5,00,000; termination payment to a retiring director ₹30,00,000; share option expense under Ind AS 102 ₹25,00,000. The company also gave a loan of ₹40,00,000 to a director. Prepare the KMP compensation disclosure.

Show the solution
  1. Short-term employee benefits: salaries and bonus ₹2,10,00,000 plus non-monetary benefits ₹18,00,000 = ₹2,28,00,000.
  2. Post-employment benefits: employer pension contributions = ₹12,00,000.
  3. Other long-term benefits: long-service award accrual = ₹5,00,000.
  4. Termination benefits: payment to the retiring director = ₹30,00,000.
  5. Share-based payment: ₹25,00,000.
  6. Total compensation = 2,28,00,000 + 12,00,000 + 5,00,000 + 30,00,000 + 25,00,000 = ₹3,00,00,000.
  7. The loan of ₹40,00,000 is not compensation. Disclose it separately as a related party transaction, with the outstanding balance and its terms.

Answer: Disclose total KMP compensation of ₹3,00,00,000: short-term ₹2,28,00,000, post-employment ₹12,00,000, other long-term ₹5,00,000, termination ₹30,00,000 and share-based payment ₹25,00,000. The ₹40,00,000 loan is excluded and disclosed as a related party transaction.

Exam tips

  • Open any KMP question with the definition and then test each person. Marks are given for stating the test and applying it.
  • In MCQs, check whether an independent director is offered as an option. Under Ind AS 24 the correct answer treats such a director as KMP.
  • Always present the five categories in a table-like list with a total. Missing the share-based payment line is a common loss of marks.
  • Separate compensation from transactions. A loan to a director is a related party transaction, not pay.
  • Write answers in provision, facts, conclusion form and quote amounts as expense for the period.

Practice questions from Ind AS 24 Related Party Disclosures

Key Management Personnel and Compensation Disclosure: frequently asked questions

Is an independent director KMP under Ind AS 24?

Yes. The definition includes any director, whether executive or otherwise. So the compensation of independent directors, such as sitting fees, is part of KMP compensation disclosure.

Is Ind AS 24 KMP the same as key managerial personnel under the Companies Act, 2013?

No. Ind AS 24 uses a function-based definition based on authority and responsibility, and it includes all directors. The Companies Act has its own specified list of positions. Use the Ind AS 24 definition in financial reporting answers.

What are the categories of KMP compensation to disclose?

There are five: short-term employee benefits, post-employment benefits, other long-term benefits, termination benefits and share-based payment. You disclose the total and each category.

Do short-term employee benefits for KMP include non-cash perquisites?

Yes. Short-term benefits include non-monetary benefits such as medical care, housing and cars for current employees, along with salaries, bonuses and paid leave payable within twelve months after the period end.