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IAS 24

Related Party Disclosures

IAS 24 requires an entity's financial statements to disclose related party relationships, transactions and outstanding balances (including commitments) necessary to draw attention to the possibility that the entity's financial position and profit or loss may have been affected by the existence of related parties. [S1]

Effective 2011-01-01Related: IAS 1 · IAS 19 · IFRS 2 · IFRS 10

Overview

IAS 24 is a disclosure-only standard: it does not change how a transaction with a related party is recognised or measured, but requires the relationship, the transaction, and any outstanding balance to be disclosed so users can assess whether the entity's results might have been different had the transaction been with an unrelated party. [S1][S2] A related party can be a person (someone with control, joint control or significant influence over the entity, or a member of its key management personnel) or an entity (a parent, subsidiary, fellow subsidiary, associate, joint venture, post-employment benefit plan, or an entity controlled, jointly controlled or significantly influenced by a related person). [S1]

Why it matters

Related party transactions are not inherently wrong, but they are where self-dealing, tunnelling of value, and undisclosed conflicts of interest are most likely to hide. For owner-managed and family-controlled businesses in particular, related party disclosure is often the single disclosure area users, lenders and regulators scrutinise most closely, because the same individuals may sit on both sides of a transaction as director, shareholder and counterparty simultaneously.

Scope

Applies to identifying related party relationships and transactions, identifying outstanding balances (including commitments) between an entity and its related parties, identifying the circumstances requiring disclosure, and determining what to disclose. It applies to the separate financial statements of a parent, venturer or investor as well as to consolidated financial statements, and requires disclosure of related party transactions and outstanding balances in both.

Key definitions

term
Related party
definition
A person or entity related to the reporting entity, as defined by control, joint control, significant influence, or key management personnel relationships, per IAS 24.9.
term
Key management personnel (KMP)
definition
Persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (executive or otherwise).
term
Close family members
definition
Family members who may be expected to influence, or be influenced by, that person in their dealings with the entity, including that person's children, spouse or domestic partner, and dependants.
term
Related party transaction
definition
A transfer of resources, services or obligations between a reporting entity and a related party, regardless of whether a price is charged.
term
Control
definition
The power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
term
Significant influence
definition
The power to participate in the financial and operating policy decisions of an entity, but without control over those policies.

Recognition

IAS 24 does not itself prescribe recognition or measurement for related party transactions; unless a specific IFRS provides otherwise, related party transactions (including transactions between entities under common control) are recognised and measured under the ordinarily applicable IFRS requirements for that type of transaction, not under a special related-party recognition regime. Its requirement is entirely about ensuring the relationship and transaction are identified and disclosed.

Initial measurement

Not applicable as a distinct concept under IAS 24 itself; a related party transaction is measured at whatever amount the relevant substantive IFRS requires (for example, at fair value for a share-based payment, or at transaction price for a sale of goods), and IAS 24 then requires disclosure of the terms and conditions, including whether they are equivalent to arm's-length terms.

Subsequent measurement

Outstanding balances with related parties (loans, receivables, payables) continue to be measured under the applicable Standard (e.g. IFRS 9 for financial instruments, including expected credit loss assessment), with IAS 24 requiring disclosure of the balance, its terms (secured or unsecured, nature of consideration for settlement), any guarantees given or received, and any provision for doubtful debts and the related expense recognised during the period.

Presentation

Related party disclosures are presented in the notes to the financial statements, generally grouped by category of related party (e.g. parent, entities with joint control or significant influence over the entity, subsidiaries, associates, joint ventures, key management personnel of the entity or its parent, and other related parties) rather than named individually except where control exists, in which case the name of the entity's parent (and ultimate controlling party, if different) is disclosed regardless of whether any transactions took place.

Disclosure checklist

  • The name of the entity's parent and, if different, the ultimate controlling party, disclosed regardless of whether any transactions occurred.
  • Key management personnel compensation in total and for each of: short-term employee benefits, post-employment benefits, other long-term benefits, termination benefits, and share-based payment.
  • For each category of related party, the nature of the relationship as well as information about transactions and outstanding balances necessary for users to understand the potential effect on the financial statements, including amounts and their terms and conditions.
  • Amounts of, and terms and conditions for, outstanding balances, including whether secured, the nature of consideration to be provided in settlement, and details of any guarantees given or received.
  • Provisions for doubtful debts related to related party balances, and the expense recognised for bad or doubtful debts from related parties during the period.
  • A statement that related party transactions were made on terms equivalent to those prevailing in arm's-length transactions only if such terms can be substantiated.

Practical treatment

The practical starting point is building a complete related party map before assessing transactions: identify the entity's parent and ultimate controlling party, all subsidiaries, associates and joint ventures, all directors and other key management personnel (including shadow and de facto directors who exercise real control though not formally appointed), and the close family members and controlled entities of each of those individuals. Only once that map exists can transactions and balances be tested against it. A common judgement area is whether a senior, non-board employee (e.g. a general manager with real operational authority) is "key management personnel" — the test is substance (authority and responsibility for planning, directing and controlling the entity's activities), not job title. See nigeria_notes for owner-managed and family-controlled business scenarios common in Nigerian practice.

Common mistakes

  • Failing to disclose the parent and ultimate controlling party simply because no transactions occurred with them during the period — this disclosure is required regardless of transactions.
  • Treating a transaction as arm's-length by default without evidence, when IAS 24 requires substantiation before making that statement.
  • Omitting a company controlled by a director's spouse or adult child from the related party map because the director personally holds no shares in it.
  • Disclosing related party balances only in aggregate when separate disclosure is needed for users to understand a specific material relationship's effect on the financial statements.
  • Missing 'close family member' relationships beyond a spouse and children (e.g. a domestic partner or a dependent relative) that IAS 24 explicitly includes.
  • Not identifying a senior non-director employee with real operational control as key management personnel because they lack a formal directorship.

CFO checklist

  • Maintain and refresh, at least annually, a complete related party map covering entity structure, directors, other key management personnel, and their close family members and controlled entities.
  • Require directors and key management personnel to complete (and update) a related party interests declaration each reporting period.
  • Ensure the audit committee (or board, where no audit committee exists) reviews related party transactions against a documented policy, consistent with good governance practice.
  • Substantiate, with evidence, any statement that related party terms are equivalent to arm's-length terms before making that disclosure.
  • Confirm KMP compensation disclosure captures all required categories (short-term, post-employment, other long-term, termination, share-based payment), not just salary.
  • Cross-check related party balances disclosed in the notes against the general ledger and loan/receivable subledgers for completeness.

FAQs

q
Do we need to disclose a sale to a company owned by our finance director's brother?
a
Only if the brother qualifies as a close family member under IAS 24 (someone who may be expected to influence, or be influenced by, the director in dealings with the entity) and the company is controlled by him; a sibling is not automatically included in the standard's illustrative list (which focuses on children, spouse/domestic partner and dependants), so this requires a judgement about the actual closeness and influence of the relationship, documented at the time.
q
Our CEO's spouse holds shares in a supplier but has no management role there — is the supplier a related party?
a
If the CEO's spouse (a close family member of key management personnel) controls, jointly controls or significantly influences the supplier, the supplier is a related party of the reporting entity, and transactions with it require disclosure regardless of whether the spouse plays an active management role.
q
Do intercompany loans between a parent and its wholly owned subsidiary need to be disclosed in the subsidiary's own financial statements?
a
Yes. IAS 24 applies to separate financial statements as well as consolidated ones; a subsidiary must disclose transactions and balances with its parent even though those balances eliminate on consolidation.

Nigeria application notes

Regulatory overlay

IAS 24 applies in full to Nigerian public interest entities under the FRCN Act 2011 mandate. [S3] Listed and other public companies are additionally subject to related party transaction governance requirements under the Nigerian Code of Corporate Governance (NCCG) 2018 and the SEC's Corporate Governance Guidelines, which sit alongside, but do not replace, IAS 24's accounting disclosure requirements. [S4][S5] Banks and financial holding companies are subject to a further, sector-specific layer under the CBN's corporate governance guidelines, which require a published policy on insider-related and related party transactions in addition to the SEC Code obligations applicable to public companies generally. [S6] Directors of any Nigerian company (not only public companies) also have a general duty under CAMA 2020 to disclose their interests in contracts and transactions to the board, which supports (but is narrower than) the full IAS 24 disclosure population. [S7]

Tax interaction (Nigeria)

Related party transactions, particularly cross-border ones, are subject to Nigeria's transfer pricing rules, which require pricing on an arm's-length basis for tax purposes; the IAS 24 accounting disclosure that a transaction was (or was not) on arm's-length terms is a distinct question from whether the transaction satisfies the tax authority's transfer pricing documentation and pricing requirements under the Nigeria Tax Act 2025 framework, and the two assessments should not be conflated. [S_TAX1] Nigerian rates, thresholds, exemptions, incentives and filing rules referenced in this file (including CIT, VAT, capital gains tax and the small-company threshold) should be independently verified against the Nigeria Tax Act 2025, the Nigeria Tax Administration Act 2025, and current NRS practice in force at the reporting or filing date, since thresholds, rates and reliefs are subject to periodic revision and to sector- or entity-specific qualifying conditions. This file does not constitute legal or tax advice. [S_TAX1][S_TAX2]

FX considerations

Related party balances denominated in a foreign currency (for example a loan from a foreign parent to its Nigerian subsidiary) are retranslated at the closing rate under IAS 21 like any other monetary item; naira volatility can materially change the disclosed naira-equivalent amount of an intercompany balance from one period to the next even where the underlying obligation is unchanged, and this should be explained rather than left for users to infer.

SME practical note

Many Nigerian SMEs are owner-managed or family-controlled, with the same individual acting as majority shareholder, managing director and counterparty to property leases, supplier arrangements or personal loans with the company; Outliers treats building the related party map as a mandatory first step of every such engagement, since these are exactly the relationships most likely to be under-disclosed by management who do not think of family dealings as 'related party transactions' in the technical sense.

Common Nigerian pitfalls

  • Assuming a family business's related party disclosures are complete because 'everyone already knows' the relationships, rather than documenting them formally in the notes.
  • Omitting a director's personal property leased to the company, or a personal loan between a shareholder-director and the company, from related party disclosure.
  • Conflating IAS 24's arm's-length disclosure question with satisfying Nigeria's separate transfer pricing documentation requirements for tax purposes.
  • Not identifying a non-director general manager or chief operating officer with real day-to-day control as key management personnel.

FRC pronouncements

The FRCN Act establishes the Council's Directorate of Corporate Governance and gives it statutory authority to issue the NCCG, which requires a listed company's audit committee to develop a related-party-transactions policy, monitor its implementation, and ensure periodic review — a governance-process requirement that complements, but does not substitute for, the specific accounting disclosures IAS 24 requires in the financial statements themselves. [S4]

Worked examples

Disclosure of a director's loan to the company

The managing director of a Nigerian trading company, who is also its majority shareholder, advances an unsecured, interest-free loan of ₦15,000,000 to the company during the year to fund working capital. The loan remains outstanding at year-end and has no fixed repayment date.

Facts

Workings

The managing director is key management personnel and a related party under IAS 24.9.

The loan is a related party transaction (a transfer of resources) regardless of whether interest is charged.

Disclosure required: nature of relationship, amount of the loan, that it is unsecured and interest-free (terms and conditions), and that it has no fixed repayment date.

Journal entries

Recognise the cash received from the director's loan.

AccountDr (₦)Cr (₦)
Cash and cash equivalents15,000,000
Loan from related party (director)15,000,000

Key management personnel compensation disclosure

A company's key management personnel (the managing director and three executive directors) received the following during the year: short-term salaries and bonuses of ₦90,000,000; pension contributions (post-employment benefits) of ₦10,000,000; and share options (share-based payment) with a grant-date fair value of ₦8,000,000 expensed during the year.

Facts

Workings

Total key management personnel compensation to disclose: 90,000,000 + 10,000,000 + 8,000,000 = 108,000,000, split by category as required by IAS 24.

Journal entries

Recognise key management personnel compensation expense for the period (illustrative combined entry; in practice recorded through payroll, pension and share-based payment systems).

AccountDr (₦)Cr (₦)
Staff costs – short-term employee benefits (KMP)90,000,000
Staff costs – post-employment benefits (KMP)10,000,000
Share-based payment expense (KMP)8,000,000
Cash / pension liability / share-based payment reserve (equity)108,000,000

Sources & citations

  1. [S1]IAS 24 Related Party Disclosures — IFRS Foundationaccessed 2026-07-18
  2. [S2]IAS 24 Related Party Disclosures — IFRS in Brief — Moore Globalaccessed 2026-07-18
  3. [S3]IFRS - Use of IFRS Standards by jurisdiction: Nigeria — IFRS Foundationaccessed 2026-07-18
  4. [S4]Enhanced Disclosure & Governance Obligations For Listed Companies In Nigeria — Global Law Expertsaccessed 2026-07-18
  5. [S5]SEC Corporate Governance Guideline and Revised FORM 01 — Securities and Exchange Commission, Nigeriaaccessed 2026-07-18
  6. [S6]An Overview Of The Corporate Governance Guidelines For Commercial, Merchant Non-Interest And Payment Services Banks And Corporate Governance Guidelines For Financial Holding Companies In Nigeria Vis-à-Vis The Code Of Corporate Governance For Public Companies Issued By The Securities And Exchange Commission — Mondaqaccessed 2026-07-18
  7. [S7]Highlights of the provisions relating to financial statements, audit and annual returns in CAMA 2020 — Dentons ACAS-Lawaccessed 2026-07-18
  8. [S_TAX1]Nigeria Tax Act, 2025 has been signed – highlights — EY Globalaccessed 2026-07-18
  9. [S_TAX2]Nigeria's 2025 Tax Reform Acts Explained: Key Changes — Baker Tilly Nigeriaaccessed 2026-07-18
Last reviewed 2026-07-18 · Reviewer: Rafiu Olawuyi, FCA (Author / Technical Reviewer)