Maintenance of Books of Account – Ind-As 24
Introduction : In era where technology as substantially replaced the usage of man-power; our portal provides service where on the basis of raw data our experts will ensure complete maintenance of books of accounts, which in turn will allow the assessee to focus on his main business. In this article we will analyze Ind-As 24.
Why Ind-As 24 is been introduced?
It has been seen that whenever transaction is been entered between two parties, then it is required to be recorded in books of account. If such transaction is between two unrelated parties then recognition of such in books of accounts is ordinary part of business. However, if such transaction is with related party than for better transparency it is necessary to provide specifically details relating to such transaction by way of notes is necessary.
As per Ind-As 24 it is necessary to Identify, i) Related Party, ii) Related Party Transaction, and mandatorily to disclose i) Name of related party irrespective of related party transactions ii) Transactions with related party iii) Outstanding balances with related parties and iv) Commitments with related parties.
Where such related party transactions are required to be disclosed?
It has already been stated that related party transaction are required to be disclosed; therefore, disclosure are required in separate financial statements without any doubt; however if entity is holding company or subsidiary company of any other companies than in such case consolidated financial statement is prepared; and it is important to note that in such statement inter-group balances are eliminated, and therefore, no question arises for disclosure of such transactions or outstanding balances of such group transactions.
Whether there are any other exemptions in relation to disclosure of related party transactions?
Entity is exempted from disclosures requirement in case where such disclosures are in conflict with the entity’s duties of confidentiality in terms of a statute, regulator or similar competent authority governing the entity; or the entity is prohibited by the statute, regulator or similar competent authority to disclose certain information otherwise required to be disclosed as per this standard.
Which are the transactions that are covered under related party transactions?
Any transfer of goods or any other resources or any provision of service irrespective of fact that whether price is charged or not. E.g., i) Purchase/ Sale of Goods or Property, ii) Provision of any service including leasing and iii) Provision of Guarantee and Collaterals.
Who will be the termed as related party of any entity?
*Also, there are some specific case where entity can be treated as related party.
In part two we will cover which are the parties that has been specifically treated as non-related parties, and how disclosures are to be made in financial statement of entity. Mainly we will cover the illustrations relating to each and every point given under the definition of related party