Document ID: chunk:federal_register_of_legislation:F2023C00394:body:0:p22
Version: federal_register_of_legislation:F2023C00394
Segment Type: other
Provision Reference: 
Character Range: 57262–60125

Around this time, Entity MED enters into a contract with Entity STU, an entity wholly-owned and controlled by a close member of Minister Z's family for Entity STU to provide cleaning services at various current and future Entity MED locations, including the new building when completed.  The cleaning contract was won by Entity STU in an open tender.  Minister Z has declared information about the contract to provide cleaning services to Cabinet and it is included as part of the Minister's Register of Members' Interests.  During the reporting period, Entity STU rendered services of $50,000 to Entity MED.  No amounts remain outstanding at Entity STU's reporting date.  Entity MED assesses the cleaning services rendered to be a material component of its total operating expenses.

Entity STU is a related party of Entity MED in accordance with the definition of a related party in paragraph 9 of the Standard.  The provision of $50,000 cleaning services by Entity STU to Entity MED described above is a related party transaction of Entity MED as there has been a transfer of services and resources between Entity MED and Entity STU.  Based on the facts and circumstances described, management of Entity MED may determine that information about the transaction is material for disclosure in its general purpose financial statements as there has been a transfer of resources occurring other than as a result of a public service provider/ taxpayer relationship between related parties and the amount of the transaction is material to Entity MED.

The provision of $50,000 cleaning services by Entity STU to Entity MED described above is also a related party transaction of State Government H as Minister Z is a member of the key management personnel of State Government H and Entity MED is a controlled entity of State Government H.  State Government H should separately assess whether the related party transaction is material for disclosure in the whole-of-government financial statements.

Government-related entities
IG13 Paragraph 25 of the Standard provides a limited exemption from the disclosure requirements of paragraph 18 for government-related entities, subject to the alternative disclosures in paragraph 26 of the Standard.  An entity considers, on balance, the range of factors included in paragraph 27, as well as any additional relevant factors, in determining the extent of the disclosure required by paragraph 26(b).  In some instances, the presence of a single factor identified in paragraph 27 will not be sufficient to inform the entity of the level of individual or collective significance of the transaction.  For example, a requirement of legislation to report on various transactions to Parliament may not of itself inform a not-for-profit public sector entity of the significance of a transaction to itself where the entity's objective