Jun 29, 2026
By Rebeca Sequeira
IAS 24, Related Party Disclosures, helps readers of financial statements identify whether an entity’s financial position, results, or cash flows may have been influenced by relationships with related parties.
This matters because a company almost never operates entirely on its own. It may be part of an economic group, share management, receive services from related companies, hold balances with shareholders, carry out transactions with subsidiaries, or interact with individuals involved in key decisions.
The main idea is quite simple: when a related-party relationship exists, that relationship may influence the terms of a transaction. For this reason, the information must be disclosed clearly, even if the transaction was carried out under normal conditions or if no price was agreed.
A related party may be either a person or an entity. In the case of individuals, it includes those who have control, joint control, or significant influence over the entity. It also includes key management personnel, meaning those involved in planning, directing, and controlling the company’s activities. In certain cases, their close family members must also be considered.
For entities, the relationship may arise when they belong to the same group, when one entity is a parent, subsidiary, associate, or joint venture of another, or when common control exists. A relationship may also exist when a person with control or significant influence participates in more than one entity.
IAS 24 interprets related-party transactions broadly. They are not limited to sales or purchases: they also include transfers of resources, services, or obligations between the reporting entity and a related party, whether or not a price has been agreed.
Type of transaction | Aspect to be reviewed |
Sales or purchases of goods | Verify that clear terms, supporting documentation, and consistency with accounting records exist. |
Provision or receipt of services | Confirm that the service is real, necessary, and sufficiently evidenced. |
Leases | Identify the asset used, contract terms, period covered, and outstanding balances. |
Transfers of assets | Document the nature of the transfer, its value, the economic rationale, and the relationship between the parties. |
Loans and financing | Review that agreed terms, term, rate, payment method, guarantees, and outstanding balance exist. |
Guarantees granted or received | Disclose the potential obligation, the risk assumed, and the relevant terms of the guarantee. |
Management or corporate service payments | Support the charge methodology, the benefit received, and the reasonableness of the charge for the entity. |
Shared use of personnel, brands, systems, or infrastructure | Explain how costs are allocated and which entities receive the economic benefit. |
Future commitments among group entities | Disclose relevant obligations that may affect the interpretation of the financial statements. |
This shows that related parties do not appear only when there is an invoice between companies. They may also be present when resources are shared, obligations are assumed, guarantees are granted, or transactions are carried out without a direct charge but with an economic effect for the entity.
When related-party transactions exist, the entity must disclose the nature of the relationship, the amount of the transactions, outstanding balances, existing commitments, relevant terms, guarantees granted or received, and any provision or expense recognized for doubtful accounts related to those balances.
Disclosure should not be limited to presenting figures. It should also help explain the substance of the relationship. A trade receivable is not the same as an intercompany loan; nor is a recurring inventory sale the same as an extraordinary transfer of assets. The note should help readers properly understand the transaction.
IAS 24 also requires disclosure of compensation for key management personnel. This information may include short-term benefits, post-employment benefits, other long-term benefits, termination benefits, and share-based payments, when applicable. Its purpose is to provide transparency regarding the compensation of those with decision-making authority within the entity.
Another important point is to identify the parent company and the ultimate parent of the group. Even if there were no transactions between those entities during the period, the relationship must be disclosed because it shows who has the ability to direct or influence the company’s relevant decisions.
Although IAS 24 is an accounting standard, it is also very useful for companies with greater tax exposure, including Large National Taxpayers. Clear disclosure of related parties helps better explain the group structure, transactions among related entities, and balances that may affect the financial statements.
In practice, the related-party note should align well with other compliance documents. The financial statements, tax reconciliation, intercompany agreements, accounting records, and transfer pricing documentation should tell the same story, without contradictions.
Accounting disclosure under IAS 24 does not replace the tax analysis of transfer pricing. Even so, it helps identify the relationships and transactions that may require a more detailed review. If a company discloses loans, administrative services, royalties, leases, or sales between related parties, it should have sufficient support for the nature, terms, and economic reasonableness of those transactions.
A good practice is to maintain an updated related-party map. This map may include group companies, relevant shareholders, ultimate beneficial owners, key management personnel, relevant family members when applicable, recurring transactions, outstanding balances, contracts, guarantees, and commitments.
It is also useful to prepare an annual matrix of related-party transactions. This tool makes it possible to compare accounting records, notes to the financial statements, the tax reconciliation, and the transfer pricing study. This reduces inconsistencies and facilitates the preparation of information for audits or requests.
IAS 24 should not be viewed as just another year-end note. When properly applied, it helps explain how the group operates, who participates in decision-making, what transactions exist among related entities, and whether those relationships may affect the reading of the financial statements.
In an environment where financial and tax transparency carries increasing weight, related parties should be managed with order, traceability, and sufficient documentation. Ultimately, accounting, tax, and corporate governance should tell the same story.
References
International Accounting Standards Board. IAS 24, Related Party Disclosures.
General Directorate of Taxation. Resolution DGT-R-22-2021, Criteria for the classification of Large National Taxpayers.
General Directorate of Taxation. Resolution MH-DGT-RES-0002-2024, Amendments and additions to Resolution DGT-R-46-2014 regarding the obligation of Large National Taxpayers to submit financial statements audited by an authorized public accountant.
Ministry of Finance. Tax Management Directorate for Large National Taxpayers. Institutional presentation on Large National Taxpayers, March 2026.