Related parties and segment reporting

Related parties (IAS 24). Transactions with related parties may not be on the terms unrelated parties would agree, and the relationship alone can affect results. IAS 24 doesn't change the measurement of those transactions; it requires disclosure so users can see them.

A person (or a close member of that person's family — such as a spouse, domestic partner, children and dependants) is related to the reporting entity if they have control, joint control or significant influence over it, or are a member of the key management personnel (KMP) of the entity or its parent. An entity is related if, among other things, it is in the same group (parent, subsidiary, fellow subsidiary), it is an associate or joint venture of the entity (or of a group member), it is a post-employment benefit plan for the entity's employees, it is controlled or jointly controlled by a related person, or it provides KMP services to the entity.

Not related by that fact alone: two entities that simply share a director; providers of finance, trade unions, utilities and government departments in their normal dealings; and a single customer, supplier or agent with whom the entity does a large volume of business, even if it is economically dependent on them.

Disclosures: the relationship with the parent and ultimate controlling party, whether or not there were transactions; KMP compensation in total and by category (short-term benefits, post-employment, other long-term, termination and share-based payments); and for transactions — their nature, amounts, outstanding balances and terms, guarantees, and any allowance for doubtful debts. A statement that terms were equivalent to arm's length may be made only if it can be substantiated. Government-related entities have a partial exemption.