IAS 24 Related Party Disclosures: Practical Examples

What do IAS 24 related party disclosures explain?

IAS 24 related party disclosures help a reader understand who stands behind a transaction. A supplier balance may be correctly recorded and still need context: the supplier might belong to the same group, or be controlled by the reporting company's chief executive. The disclosure connects that relationship with the business activity and the amounts remaining unpaid.

The [IFRS Foundation's IAS 24 overview](https://www.ifrs.org/issued-standards/list-of-standards/ias-24-related-party-disclosures/) explains the purpose: relationships, transactions, and outstanding balances can affect how users understand financial performance and position. A transfer can be relevant even when nobody charges a price.

Imagine joining a Saudi trading company's finance team during year-end close. Your manager gives you a vendor report and asks for the related party note. Sorting by the largest balance is a useful start, but it cannot identify the owner's other businesses or explain a service provided without an invoice. You need evidence from outside the accounting system.

Start with the relationship, then follow the money. This article uses two fictional Saudi businesses to show that workflow. The cases isolate disclosure preparation using stipulated, already validated accounting amounts. They do not replace the standards used to recognise or measure the underlying transactions.

The examples assume ordinary corporate reporting under the full IAS 24 disclosure requirements. They are extracts for learning, rather than complete financial statements. A finished note also needs the applicable comparative information and other material facts specific to the reporting entity.

Who belongs in IAS 24 related party disclosures?

Draw the reporting company in the centre of a relationship map. Add its parent and subsidiaries, the people who control it, and those who direct its activities. For each connection, record the actual basis for the conclusion rather than writing only “same owner” or “management connection.”

IAS 24 paragraph 9 sets out the detailed tests. Common cases include group entities, associates, joint ventures, key management, and entities controlled by a relevant individual. The tests are specific: sharing a director or depending heavily on one customer does not, by itself, make two companies related. Check the actual ownership and decision-making rights before expanding the list.

A useful working paper has four columns: party, relationship, evidence, and period covered. Attach the ownership chart, management declarations, and documents supporting any changes. If a vendor changes ownership during the year, keep the date visible so the reviewer can assess transactions in the correct period.

Family relationships require careful assessment. The Interpretations Committee's [2015 clarification on close family members](https://www.ifrs.org/content/dam/ifrs/supporting-implementation/agenda-decisions/2015/ias-24-definition-of-close-members-of-the-family-of-a-person.pdf) explains that the standard's list is not exhaustive. Other relatives can qualify depending on the facts; a surname match alone does not establish the answer.

Keep difficult conclusions in a short memo. State what you know, what evidence is missing, and who confirmed the facts. This makes the process reviewable next year and helps prevent an uncertain relationship from quietly becoming a permanent classification in the vendor master.

Which records turn the relationship list into a note?

Once the list is agreed, match it to customer, supplier, payroll, treasury, and contract records. Use party identifiers wherever possible. A single business may appear under an Arabic trading name, an English name, and a legacy supplier code; searching only one name can leave part of the activity outside the schedule.

Build the schedule from the [general ledger](/glossary#general-ledger), then reconcile it to the detailed accounts. A [control account reconciliation](/learn/control-accounts-vs-subsidiary-ledgers) helps establish that the balances are complete before you describe them in the note. Keep annual activity separate from the closing balance.

The core disclosure fields in IAS 24 paragraphs 18–19 cover the relationship, transaction amounts, outstanding balances and commitments, settlement terms, security and guarantees, and relevant doubtful-debt information. Use the [equivalent paragraph text published by XRB](https://standards.xrb.govt.nz/standards-navigator/nz-ias-24/) to follow those requirements; New Zealand-specific reduced-disclosure concessions are outside this article's assumptions.

Make every number traceable. Beside each amount, record the source report, extraction date, and reconciliation reference. Beside each narrative statement, record its evidence: for example, the contract supporting a 60-day payment term.

A contract register matters because an unperformed purchase commitment may have no supplier invoice. A management declaration matters because a service supplied without a charge may have no payment record. Neither situation is solved by increasing the number of ledger accounts searched. Ask which business events the records could fail to capture, and check those events separately.

Worked example 1: reconcile Rimal Trading's supplier note

Rimal Trading and Nakhil Packaging are fictional Saudi companies wholly owned by the same parent, Rimal Holdings, throughout the year. Prepare the note for Rimal Trading's own financial statements. Nakhil supplies packaging and provides a separate packing service. All figures below are stipulated recorded amounts in SAR, with no returns, discounts, offsets, or other movements.

At the start of the year, Rimal owes Nakhil SAR 90,000 for packaging and nothing for services. During the year, packaging purchases total SAR 720,000 and services received total SAR 120,000. Rimal pays SAR 630,000 against packaging and SAR 100,000 against services. The supplier allocation report supports that split.

The reconciliation is SAR 90,000 + SAR 840,000 − SAR 730,000 = SAR 200,000. Match that result to the Nakhil supplier account and the relevant [accounts payable](/glossary#accounts-payable-ap) balance. Payments are a reconciliation input; they are not a substitute for disclosing the year's purchases and services.

The contract confirms that the closing balance is unsecured, non-interest-bearing, and payable in cash within 60 days. No guarantees were given or received. Rimal also has an unperformed packaging purchase commitment of SAR 240,000 with Nakhil at year-end. No goods under that commitment have been received and no liability is recorded for it in this case.

A concise note extract would identify Nakhil as a fellow subsidiary, show packaging purchases of SAR 720,000 and services of SAR 120,000, disclose the SAR 200,000 payable with its terms, and describe the separate SAR 240,000 commitment. The payable and the commitment answer different questions; adding them into one “amount owed” would distort the case.

Now test the schedule. If another SAR 30,000 packaging payment had cleared before year-end, the payable would be SAR 170,000, while transaction amounts and the unperformed commitment would remain unchanged. This variation checks whether you can distinguish activity, settlement, and future obligations without rewriting the entire note.

Worked example 2: separate management pay from supplier activity

Sahil Logistics is another fictional Saudi company. Its chief executive controls Marjan Support, a business that supplies warehouse support services to Sahil. The relationship exists throughout the year. Sahil receives SAR 300,000 of services, pays SAR 240,000, and has no opening balance or other movements. Its closing payable to Marjan is therefore SAR 60,000.

Show that service transaction and payable in the appropriate related party category, with the relationship and payment terms. Assume the payable is unsecured, non-interest-bearing, and due in cash within 30 days, with no guarantees or outstanding service commitments. Marjan's invoice is for contracted business services; it is not personal remuneration paid to the chief executive.

Separately, Sahil's validated compensation schedule for all its key management personnel contains the following current-year amounts. Assume the benefit and share-based payment measurements have already been reviewed under the applicable accounting standards. This exercise classifies those amounts for disclosure; it does not calculate benefit obligations or award valuations.

The short-term amount includes SAR 800,000 paid and a SAR 40,000 earned bonus payable after year-end. [Accrual accounting](/glossary#accrual-accounting) explains why a cash-only payroll extract would miss that bonus. Adding the five compensation categories gives SAR 1,000,000; adding the supplier's SAR 300,000 would wrongly mix two different disclosures.

IAS 24 paragraph 17 requires the compensation total and its categories. Review the actual responsibilities of the people included, rather than treating every employee with “manager” in the job title as key management. The [IFRS Foundation overview](https://www.ifrs.org/issued-standards/list-of-standards/ias-24-related-party-disclosures/) also highlights compensation disclosure as a separate requirement.

For a practice variation, increase the earned unpaid bonus by SAR 20,000, leaving everything else unchanged. Short-term compensation becomes SAR 860,000 and total compensation becomes SAR 1,020,000. The Marjan payable stays SAR 60,000. Explaining why that payable does not move is as important as adding the compensation correctly.

What changes when you prepare consolidated statements?

Write the reporting boundary at the top of the working paper before reusing a prior-year note. Rimal Trading's own financial statements and the consolidated financial statements of Rimal Holdings answer different questions. A schedule that is correct for one cannot be copied automatically into the other.

In the ordinary group consolidation assumed in the first example, the intragroup transactions and balances between Rimal and Nakhil are eliminated. The [basics of consolidation](/learn/consolidation-ifrs-10-basics) explain that process. IAS 24 paragraph 4 includes an exception for investment entities and subsidiaries measured at fair value through profit or loss; the Rimal case does not use that exception. See [ACCA's related party technical questions](https://www.accaglobal.com/uk/en/member/discover/cpd-articles/corporate-reporting/mcqs/holt-mcqjul16.html) for the distinction.

Elimination does not mean the parent relationship disappears. IAS 24 paragraph 13 requires identification of the parent and, when different, the ultimate controlling party, including where there were no transactions. The reporting boundary must therefore be clear in both the numbers and the relationship narrative.

Government-related entities need a separate assessment. The [IFRS Foundation's completed amendment project](https://www.ifrs.org/projects/completed-projects/2009/related-party-disclosures-amendments-to-ias-24/) explains the targeted relief. Paragraphs 25–26 provide relief for specified government-related transactions while retaining disclosure requirements. Supplying a government customer does not automatically qualify a business for that relief.

In your file, separate the original entity schedule from the consolidation adjustments. Record why a line was removed, retained, or reclassified, and leave a reference to the group reporting instructions. That simple trail helps the next reviewer understand which reporting boundary each number belongs to.

Which common mistakes make a related party note unreliable?

Using the closing balance as the year's activity. In the Rimal case, SAR 200,000 is unpaid at year-end, but transactions total SAR 840,000. Label the columns clearly and check both numbers against different source reports.

Treating settlement as removal from the disclosure population. A supplier paid in full before year-end can still have significant related party transactions during the year. Keep transaction reports even when the ending account balance is zero.

Calling every connected business a related party. A common director or a major supply contract is an investigation clue, not a complete conclusion. Record which relationship test is actually met and avoid copying unsupported labels.

Assuming a family company needs no credit review. If the reporting entity has a receivable, consider its measurement and impairment under the applicable standards. For disclosure, keep relevant allowances and bad-debt expense visible; ownership ties alone do not prove collectability.

Describing prices as arm's length without evidence. IAS 24 paragraph 23 restricts that assertion to terms that can be substantiated. A director's approval signature confirms approval, not market comparability. If the evidence is absent, describe the known terms accurately.

Adding a disclosure as if it were a new transaction. The Rimal note does not create a second purchase expense. Any accounting correction needs its own reason and entry; preparing the disclosure schedule is a separate task.

Before sign-off, read the note without the workbook open. A reader should understand who is related, what happened, what remains outstanding, and where a commitment differs from a recorded balance.

How can you practise the workflow on Accountery?

Start with a blank sheet and rebuild the Rimal reconciliation without looking at the table. Explain the opening balance, current-year purchases and services, payments, and closing balance in your own words. Then write a short note that includes the relationship and settlement terms. Compare the narrative with the case facts, not just the arithmetic.

Repeat the exercise for Sahil. Prepare two separate blocks: Marjan's services and payable, then management compensation. Check that the unpaid bonus appears in the compensation calculation and that the supplier invoice is not absorbed into management pay.

For a final challenge, change one fact at a time. Set Rimal's closing payable to zero through additional settlement, remove the unperformed commitment because the order was cancelled, or change Sahil's bonus estimate. Write down which disclosure fields change before recalculating. Working this way reveals whether you understand the relationship between the facts and the note.

You can use [Accountery's accounting practice approach](/learn/why-use-accounting-simulator) to strengthen the entries and reconciliations that support this work, then prepare the IAS 24 note alongside your practice. Treat the disclosure exercise as a separate review task; the article does not assume an automated related party note generator.

Keep a small error log with three headings: relationship evidence, arithmetic, and missing narrative. On your next attempt, address the error category that caused the most trouble. The useful result is a note that another person can trace back to the facts and reproduce.

Sources were checked on 21 September 2026. The [current IAS 24 standards tracker](https://www.icaew.com/technical/corporate-reporting/ifrs/ifrs-accounting-standards-tracker/ias-24-related-party-disclosures) is a useful starting point when revisiting the topic for a later reporting period.