In business, relationships matter 🤝 — and in financial reporting, they matter even more.

In this episode 🎙️, we unpack IAS 24 — the standard that forces companies to reveal transactions with insiders.

Because a deal with your CEO’s family member is never just “normal business.” 👀

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What we cover in this episode:

• Identifying the Circle 🔍

Who counts as a related party?

It’s broader than most think:

✔️ Parent and subsidiaries

✔️ Associates and joint ventures

✔️ Key Management Personnel (KMP)

✔️ Close family members of those individuals

✔️ Entities controlled or significantly influenced by them

If influence exists, transparency follows.

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• The Disclosure Mandate 📘

Even if no transactions occurred, the existence of certain related party relationships must still be disclosed.

Relationship alone can create risk.

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• The Arm’s Length Myth ⚖️

Saying “the deal was at market price” isn’t enough.

If you claim arm’s length, you must substantiate it.

Otherwise, the disclosure must stand on its own.

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• Key Management Personnel (KMP) Compensation 💼

IAS 24 requires disclosure of five categories:

1️⃣ Short-term employee benefits

2️⃣ Post-employment benefits

3️⃣ Other long-term benefits

4️⃣ Termination benefits

5️⃣ Share-based payments

Transparency at the top is non-negotiable.

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• Government-Related Entities 🇸🇦

For entities controlled by the same government, IAS 24 allows simplified disclosures.

This is especially relevant in Saudi Arabia, where state ownership structures are common.

Still disclosed — but less granular.

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• Intra-group Eliminations 🔄

In consolidated financial statements:

👉 Intra-group transactions are eliminated.

👉 But related party disclosures still apply where required.

For separate financial statements, disclosures remain critical.

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🔥 A Pro-Tip for your SOCPA Prep

The Close Family Member rule is a classic trap 🚨.

Under IAS 24, a related party includes close family members of someone who has control or significant influence.

“Close” generally includes:

✔️ Spouse or domestic partner

✔️ Children

✔️ Dependents

If the CEO’s son owns a supplier that sells to the company, that is a Related Party Transaction — and must be disclosed.

Examiners love these indirect influence scenarios 🎯.

IAS 24 isn’t about accusing wrongdoing.

It’s about ensuring users can see where influence might exist — and judge accordingly.