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

Sagar Textiles Ltd, a listed company, is preparing its Ind AS financial statements. A statute applicable to it prohibits disclosure of the identity of a particular counterparty and the details of dealings with it. The counterparty is a related party. As per Ind AS 24, how should Sagar Textiles treat the related party disclosures for these dealings?

Sagar Textiles need not make the disclosures that conflict with the statutory confidentiality requirement. Ind AS 24 recognises that accounting standards cannot override legal or regulatory requirements, so disclosures prohibited by statute or regulation are not required to be made.

  1. ADisclose in full, because Ind AS always overrides statutory confidentiality
  2. BNot required to make the disclosures that conflict with the statutory confidentiality requirementCorrect
  3. CDisclose only the amount of the transactions but never the nature of the relationship
  4. DDisclose the details in the notes only if the auditor approves

Explanation

Ind AS 24 (paragraphs 4A and 4B) departs from IAS 24 by exempting disclosures that conflict with confidentiality requirements of statute or regulations, since accounting standards cannot override legal or regulatory requirements. Option A states the opposite. Options C and D invent conditions that are not in the standard.

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