Document ID: chunk:federal_register_of_legislation:F2023C00394:body:0:p31
Version: federal_register_of_legislation:F2023C00394
Segment Type: other
Provision Reference: 
Character Range: 81257–84239

to a Minister's compensation.

Related party transactions
BC14 The definition of 'related party' in AASB 124 separately addresses persons and entities related to the entity preparing general purpose financial statements.  The partial exemption in AASB 124 from the disclosure requirements for government-related entities applies only in relation to those entities specified in paragraphs 25(a) and 25(b) of that Standard, and not also to persons who are related parties covered by paragraph 17 (key management personnel compensation) or paragraph 18 (transactions during the periods covered by the financial statements) of AASB 124.
BC15 Having regard to the partial exemption for government-related entities in AASB 124, the Board considered whether providing an exemption for the disclosure of related party transactions with Ministers or local government councillors was justified by any circumstances unique to the public sector and that may not have been considered by the IASB, whose mandate is limited to for-profit entities.  The Board's consideration included the role of Ministers in a government and how onerous the disclosures required under AASB 124 might be.  As part of its consideration, the Board had regard to the New Zealand Accounting Standards Board's decisions relating to disclosures of related party transactions with Ministers.
BC16 The Board observed that Ministers who are members of the key management personnel of their government would also be related parties not only of the government but also of each controlled entity of the government.  Accordingly, a subsidiary government entity will be required to disclose related party transactions with Ministers who may have no responsibility for the entity to the extent the disclosures are considered material, from the entity's perspective, for disclosure.  For example, the Board noted that in Example 1 of the Illustrative Examples accompanying AASB 124, Entities 1¬, 2, A, B, C and D will be required to disclose in their financial statements related party transactions between a Minister who is a member of the key management personnel of Government G and the entity, even where the Minister's portfolio does not include the entity.
BC17 The Board noted that, as is often the case with related party transactions, judgement would be required as to when transactions are material, especially when qualitative assessments are made about the nature of transactions.  The Board considered situations in which key management personnel of a not-for-profit public sector entity, including Ministers or local government councillors where so identified, paid taxes, levies or other statutory charges or fees faced generally by citizens, or used public services such as state hospitals or schools.  The Board does not expect, absent unusual circumstances, that the application of materiality would result in disclosure in many of these situations.  In contrast, a commercial contract entered into by a Minister