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CA Final · Financial Reporting · Ind AS 24 Related Party Disclosures

Ind AS 24 differs from IAS 24 in its list of examples of related party transactions. Vikram Engineering Ltd. sends its engineers on deputation to its associate, Kaveri Tools Ltd., under an arrangement where Kaveri pays Vikram for their services. How should Vikram view this arrangement under Ind AS 24?

The deputation arrangement is a related party transaction. Ind AS 24 specifically adds management contracts, including for deputation of employees, to its examples in paragraph 21, so Vikram must treat it as such regardless of whether goods are sold.

  1. AIt is not a related party transaction because no goods are sold
  2. BIt is a related party transaction, as management contracts including for deputation of employees are listed as an exampleCorrect
  3. CIt is a related party transaction only if the amount exceeds 10% of turnover
  4. DIt is a related party transaction only for Kaveri, not for Vikram

Explanation

Ind AS 24 adds to paragraph 21 the example '(k) management contracts including for deputation of employees'. Such an arrangement is a transfer of resources, services or obligations between related parties and is a related party transaction for both entities. No percentage threshold is imposed by the standard.

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