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

Tarang Engineering Ltd sends a few of its engineers on deputation to Vihaan Power Ltd, an entity under common control, under a written arrangement. The accountant wonders whether this arrangement features in the examples of related party transactions in Ind AS 24. Which is correct?

Deputation of employees under a management contract with a related party is an example of a related party transaction because Ind AS 24 adds item (k), management contracts including for deputation of employees, to the list in paragraph 21. It is an Ind AS addition not found in IAS 24.

  1. AIt is an example, because paragraph 21 of Ind AS 24 adds 'management contracts including for deputation of employees' as a related party transactionCorrect
  2. BIt is not an example, because only purchases and sales of goods are listed in paragraph 21
  3. CIt is an example only under IAS 24, not under Ind AS 24
  4. DIt is an example only if the deputed employees are key management personnel

Explanation

Appendix 1 states that Ind AS 24 adds to the examples in paragraph 21 item (k), management contracts including for deputation of employees. Hence such an arrangement with a related party is an illustrative related party transaction. Option C reverses the position, as the addition is specific to Ind AS.

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