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

Vindhya Power Ltd has deputed three engineers to its associate under an arrangement whereby the associate pays for their services. The accountant is unsure whether this arrangement is a related party transaction to be disclosed. Which statement is correct under the Indian Ind AS 24 text?

The deputation is an example of a related party transaction. The Indian Ind AS 24 adds to paragraph 21 the example of management contracts including for deputation of employees, so Vindhya Power should treat the arrangement with its associate as a related party transaction for disclosure.

  1. AIt is not a related party transaction because it concerns employees and not goods
  2. BParagraph 21 in Indian Ind AS 24 includes management contracts, including for deputation of employees, as an example of a related party transactionCorrect
  3. CIt is a related party transaction only if the engineers are key management personnel
  4. DIt must be disclosed only by the associate and not by Vindhya Power

Explanation

Appendix 1 notes that paragraph 21 was expanded with example (k), management contracts including for deputation of employees. The deputation therefore qualifies as an example of a related party transaction. Nothing limits it to key management personnel or to one party.

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