ASLB 20 Related Party
Accounting Standards for Local Bodies (ASLB) 20
Related Party Disclosures
Contents
Paragraphs
OBJECTIVE
SCOPE 1–3
DEFINITIONS 4–17
Close Member of the Family of an Individual 5
Key Management Personnel 6–9
Related Parties 10–15
Remuneration of Key Management Personnel 16
THE RELATED PARTY ISSUE 18–21
Remuneration of Key Management Personnel 21
MATERIALITY 22
DISCLOSURE 23–41
Disclosure of Control 25–26
Disclosure of Related Party Transactions 27–33
Disclosure — Key Management Personnel 34–41
ILLUSTRATIVE EXAMPLES
APPENDIX 1 COMPARISON WITH IPSAS 24, ‘RELATED PARTY
DISCLOSURES’
APPENDIX 2 COMPARISON WITH EXISTING AS 18, ‘RELATED PARTY
DISCLOSURES’
Compendium of Accounting Standards for Local Bodies (ASLBs)
Accounting Standard for Local Bodies (ASLB) 20
Related Party Disclosures
(This Accounting Standard includes paragraphs set in bold italic type and
plain type, which have equal authority. Paragraphs in bold italic type indicate
the main principles. This Accounting Standard should be read in the context
of its objective and the Preface to Accounting Standards for Local Bodies1.)
The Accounting Standards for Local Bodies (ASLB) 20, ‘Related Party
Disclosures’, issued by the Council of the Institute of the Chartered
Accountants of India, will be recommendatory in nature in the initial years for
use by the Local Bodies. This Standard will be mandatory for Local Bodies in
a State from the date specified in this regard by the State Government
concerned2.
The following is the text of the Accounting Standards for Local Bodies.
Objective
The objective of this Standard is to require the disclosure of the existence of
related party relationships where control exists and the disclosure of
information about transactions between the entity and its related parties in
certain circumstances. This information is required for accountability
purposes and to facilitate a better understanding of the financial position and
performance of the reporting entity. The principal issues in disclosing
information about related parties are identifying which parties control or
significantly influence the reporting entity and determining what information
should be disclosed about transactions with those parties.
Scope
1. An entity which prepares and presents financial statements under
the accrual basis of accounting should apply this Standard in
disclosing information about related party relationships and
certain transactions with related parties.
1Attention is specifically drawn to paragraph 4.2 of the ‘Preface to Accounting Standards
for Local Bodies’, according to which Accounting Standards are intended to apply only to
items which are material.
2 In respect of compliance with the Accounting Standards for Local Bodies, reference
may be made to the paragraph 7.1 of the ‘Preface to the Accounting Standards for
Local Bodies’.
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Related Party Disclosures
2. This Standard applies to all entities that are described as the
Local Bodies in the Preface to Accounting Standards for Local
Bodies3.
3. [Refer to Appendix 1]
Definitions
4. The following terms are used in this Standard with the meanings
specified:
Close members of the family of an individual are close relatives of
the individual or members of the individual’s immediate family
who can be expected to influence, or be influenced by, that
individual in their dealings with the entity.
Key management personnel are:
(a) All directors or members of the governing body of the
entity; and
(b) Other persons having the authority and responsibility for
planning, directing and controlling the activities of the
reporting entity. Where they meet this requirement, key
management personnel include:
(i) Where there is a member of the governing body of
Central/State Government who has the authority and
responsibility for planning, directing and controlling
the activities of the reporting entity, that member;
(ii) Any key advisors of that member; and
(iii) Unless already included in (a), the senior management
group of the reporting entity, including the chief
executive or permanent head of the reporting entity.
Oversight means the supervision of the activities of an entity,
with the authority and responsibility to control, or exercise
significant influence over, the financial and operating decisions
of the entity.
3 Refer paragraph 1.3 of the ‘Preface to the Accounting Standards for Local Bodies’.
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Compendium of Accounting Standards for Local Bodies (ASLBs)
Related party means parties are considered to be related if one
party has the ability (a) to control the other party, or (b) exercise
significant influence over the other party in making financial and
operating decisions or if the related party entity and another
entity are subject to common control. Related parties include:
(a) Entities that directly, or indirectly through one or more
intermediaries, control, or are controlled by the
reporting entity;
(b) Associates (see ASLB 36, ‘Investments in Associates and
Joint Ventures’);
(c) Individuals having, directly or indirectly, an interest in
the reporting entity that gives them significant influence
over the entity, and close members of the family of any
such individual;
(d) Key management personnel, and close members of the
family of key management personnel; and
(e) Entities in which a substantial ownership interest is held,
directly or indirectly, by any person described in (c) or (d),
or over which such a person is able to exercise significant
influence.
Related party transaction is a transfer of resources or obligations
between related parties, regardless of whether a price is charged.
Related party transactions exclude transactions with any other
entity that is a related party solely because of its economic
dependence on the reporting entity or the Government of which it
forms part.
Remuneration of key management personnel is any consideration
or benefit derived directly or indirectly by key management
personnel from the reporting entity for services provided in their
capacity as members of the governing body or otherwise as
employees of the reporting entity.
Significant influence (for the purpose of this Standard) is the
power to participate in the financial and operating policy
decisions of an entity, but not control those policies. Significant
influence may be exercised in several ways, usually by
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Related Party Disclosures
representation on the governing body or any of its Committees
but also by, for example, participation in the policy making
process, material transactions between entities within an
economic entity, interchange of managerial personnel or
dependence on technical information. Significant influence may
be gained by an ownership interest, statute or agreement. With
regard to an ownership interest, significant influence is presumed
in accordance with the definition contained in ASLB 36.
Terms defined in other ASLBs are used in this Standard with the
same meaning as in those other Standards.
Close Member of the Family of an Individual
5. Judgment will be necessary in determining whether an individual
should be identified as a close member of the family of an individual
for purposes of application of this Standard. In the absence of
information to the contrary, such as that a spouse or other relative is
estranged from the individual, the following immediate family members
and close relatives are presumed to have, or be subject to, such
influence as to satisfy the definition of close members of the family of
an individual:
(a) A spouse, domestic partner, dependent child or relative living in
a common household;
(b) A grandparent, parent, nondependent child, grandchild, brother
or sister; and
(c) The spouse or domestic partner of a child, a parent-in-law,
a brother-in-law or a sister-in-law.
Key Management Personnel
6. Key management personnel include all directors or elected or
appointed members of the governing body of the reporting entity
where that body has the authority and responsibility for planning,
directing and controlling the activities of the entity.
7. Where an entity is subject to the oversight of an elected or appointed
representative of the governing body of the Central/ State
Government, that person is included in key management
personnel if the oversight function includes the authority and
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responsibility for planning, directing and controlling the activities of the
entity. In many cases, key advisors of that person may not possess
sufficient authority, legal or otherwise, to satisfy the definition of key
management personnel. In other cases, key advisors of that person
may be deemed to be key management personnel because they have
a special working relationship with an individual who has control over
an entity. They therefore have access to privileged information and
may also be able to exercise control or significant influence over an
entity. Judgment is required in assessing whether an individual is a
key advisor and whether that advisor satisfies the definition of key
management personnel, or is a related party.
8. The governing body and its Committees, together with the chief
executive and senior management group has the authority and
responsibility to plan and control the activities of the entity, to manage
the resources of the entity and for the overall achievement of entity
objectives. Therefore, key management personnel will include the
chief executive and senior management group of the reporting entity.
9. The senior management group of an economic entity may comprise
individuals from both the controlling entity and other entities that
collectively make up the economic entity.
Related Parties
10. In considering each possible related party relationship, attention is
directed to the substance of the relationship, and not merely the legal
form.
11. Where two entities have a member of key management personnel in
common, it is necessary to consider the possibility, and to assess the
likelihood, that this person would be able to affect the policies of both
entities in their mutual dealings. However, the mere fact that there is a
member of key management personnel in common does not
necessarily create a related party relationship.
12. In the context of this Standard, the following are deemed not to be
related parties:
(a) (i) Providers of finance in the course of their business in
that regard; and
(ii) Trade unions;
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Related Party Disclosures
in the course of their normal dealings with an entity by virtue
only of those dealings (although they may circumscribe the
freedom of action of an entity or participate in its decision-
making process); and
(b) An entity with which the relationship is solely that of an agency.
13. Related party relationships may arise when an individual is either a
member of the governing body or is involved in the financial and
operating decisions of the reporting entity. Related party relationships
may also arise through external operating relationships between the
reporting entity and the related party. Such relationships will often
involve a degree of economic dependency.
14. Economic dependency, where one entity is dependent on another in
that it relies on the latter for a significant volume of its funding or sale
of its goods and services, would on its own be unlikely to lead to
control or significant influence and is therefore unlikely to give rise to a
related party relationship. As such, a single customer, supplier,
franchisor, distributor, or general agent with whom an entity transacts
a significant volume of operation will not be a related party merely by
virtue of the resulting economic dependency. However, economic
dependency, together with other factors, may give rise to significant
influence and therefore a related party relationship. Judgment is
required in assessing the impact of economic dependence on a
relationship. Where the reporting entity is economically dependent on
another entity, the reporting entity is encouraged to disclose the
existence of that dependency.
15. The definition of related party includes entities owned by key
management personnel, close family members of such individuals or
major shareholders (or equivalent where the entity does not have a
formal equity structure) of the reporting entity. The definition of related
party also includes circumstances in which one party has the ability to
exercise significant influence over the other party. In Local Bodies, an
individual or entity may be given oversight responsibility for a reporting
entity, which gives them significant influence, but not control, over the
financial and operating decisions of the reporting entity. For the
purposes of this Standard, significant influence is defined to
encompass joint ventures.
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15A. Related party disclosure requirements as laid down in this
Standard do not apply in circumstances where providing such
disclosures would conflict with the reporting entity’s duties of
confidentiality as specifically required in terms of a statute or by
any regulator or similar competent authority.
Remuneration of Key Management Personnel
16. Remuneration of key management personnel includes remuneration
derived by individuals from the reporting entity for services provided to
the reporting entity in their capacity as members of the governing body
or employees. Benefits derived directly or indirectly from the entity for
services in any capacity other than as an employee or a member of
the governing body do not satisfy the definition of remuneration of key
management personnel in this Standard. However, paragraph 34
requires disclosures to be made about certain of these other benefits.
Remuneration of key management personnel excludes any
consideration provided solely as a reimbursement for expenditure
incurred by those individuals for the benefit of the reporting entity,
such as the reimbursement of accommodation costs associated with
work-related travel.
17. [Refer to Appendix 1]
The Related Party Issue
18. Related party relationships exist throughout the Local-self
Government, because:
(a) Administrative units are subject to the overall direction of the
Local Body and, ultimately, the Council or similar body of
elected or appointed officials, and operate together to achieve
the policies of the Local Body;
(b) Local Bodies frequently conduct activities necessary for the
achievement of different components of their responsibilities
and objectives through separate controlled entities, and through
entities over which they have significant influence; and
(c) Ministers of the government or elected or appointed members of
the governing body of Local Body and senior management
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Related Party Disclosures
group can exert significant influence over the operations of a
Local Body.
19. Disclosure of certain related party relationships and related party
transactions and the relationship underlying those transactions is
necessary for accountability purposes and enables users to better
understand the financial statements of the reporting entity because:
(a) Related party relationships can influence the way in which an
entity operates with other entities in achieving its individual
objectives, and the way in which it co-operates with other
entities in achieving common or collective objectives;
(b) Related party relationships might expose an entity to risks or
provide opportunities that would not have existed in the absence
of the relationship; and
(c) Related parties may enter into transactions that unrelated
parties would not enter into, or may agree to transactions on
different terms and conditions than those that would
normally be available to unrelated parties. This may occur in
Local Bodies where goods and services are transferred between
one Local Body to another Local Body at less than full cost
recovery as a part of normal operating procedures consistent
with the achievement of the objectives of the reporting entity.
The entities are expected to use resources efficiently, effectively
and in the manner intended, and to deal with public monies with
the highest levels of integrity. The existence of related party
relationships means that one party can control or significantly
influence the activities of another party. This provides the
opportunity for transactions to occur on a basis that may
advantage one party inappropriately at the expense of another.
20. Disclosure of certain types of related party transactions that occur and
the terms and conditions on which they were conducted allows users
to assess the impact of those transactions on the financial position and
performance of an entity and its ability to deliver agreed services. This
disclosure also ensures that the entity is transparent about its dealings
with related parties.
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Compendium of Accounting Standards for Local Bodies (ASLBs)
20A. Because there is an inherent difficulty for management to determine
the effect of influences which do not lead to transactions, disclosures
of such effects is not required by the Standard.
Remuneration of Key Management Personnel
21. Key management personnel hold positions of responsibility within an
entity. They are responsible for the strategic direction and operational
management of an entity and are entrusted with significant authority.
Their salaries are often established by statute or Government Order or
Governing Body of the entity. However, their responsibilities may
enable them to influence the benefits of office that flow to them or their
related parties. This Standard requires certain disclosures to be made
about the remuneration of key management personnel and close
members of the family of key management personnel during the
reporting period, loans or advances made to them and the
consideration provided to them for services they provide to the entity
other than as a member of the governing body or an employee. The
disclosures required by this Standard will ensure that appropriate
minimum levels of transparency are applied to the remuneration of key
management personnel and close members of the family of key
management personnel.
Materiality
22. ASLB 1, ‘Presentation of Financial Statements’ requires the separate
disclosure of material items. The materiality of an item is determined
with reference to the nature or size of that item. When assessing the
materiality of related party transactions, the nature of the relationship
between the reporting entity and the related party and the nature of the
transaction may mean that a transaction is material regardless of its
size.
Disclosure
23. [Refer to Appendix 1]
24. Some ASLBs also require disclosure of transactions with related
parties. For example, ASLB 1 requires disclosure of amounts payable
to and receivable from controlling entities, fellow controlled entities,
associates and other related parties. ASLB 38, ‘Disclosure of Interests
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Related Party Disclosures
in Other Entities’4 requires an entity to disclose information that
enables users of its consolidated financial statements to understand
the composition of the economic entity and information about each
joint arrangement and associate that is material to the reporting entity.
Disclosure of Control
25. Related party relationships where control exists should be
disclosed irrespective of whether or not there have been
transactions between the related parties.
26. In order for a reader of financial statements to form a view about the
effects of related party relationships on a reporting entity, it is
appropriate to disclose related party relationships where control exists,
irrespective of whether or not there have been transactions between
the related parties. This would involve the disclosure of the names of
any controlled entities, the name of the immediate controlling entity
and the name of the ultimate controlling entity, if any.
Disclosure of Related Party Transactions
27. If there have been transactions between related parties,
during the existence of related party relationship, the
reporting entity should disclose the following:
(a) The name of the transacting related party;
(b) A description of the nature of the relationship with related
parties involved in the transactions. For example, whether
the relationship was one of a controlling entity, a controlled
entity, an entity under common control, or key management
personnel;
(c) A description of the related party transactions within each
broad class of transaction and an indication of the volume
of the classes, either as a specific monetary amount or as a
proportion of that class of transactions and/or balances;
(d) Any other elements of the related party transactions
4
ASLB 38 is yet to be formulated/ issued. The Guidance in regard to this subject
may be obtained from other corresponding pronouncements as per the hierarchy
prescribed in paragraph 15 of the ASLB 3, ‘Accounting Policies, Changes in
Accounting Estimates, and Errors’.
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Compendium of Accounting Standards for Local Bodies (ASLBs)
necessary to clarify the significance of these transactions
to its operations and sufficient to enable the financial
statements to provide relevant and reliable information for
decision making and accountability purposes; and
(e) Amounts or appropriate proportions of outstanding items.
28. The following are examples of the related party transactions in respect
of which disclosures may be made by a reporting entity:
(a) Rendering or receiving of services;
(b) Purchases or transfers/sales of goods (finished or unfinished);
(c) Purchases or transfers/sales of property and other assets;
(d) Agency arrangements;
(e) Leasing arrangements;
(f) Transfer of research and development;
(g) License agreements;
(h) Finance (including loans, capital contributions, grants whether in
cash or in kind and other financial support including cost sharing
arrangements);
(i) Guarantees and collaterals; and
(j) Management contracts including deputation of employees.
28A. Paragraph 27 (d) requires disclosure of “any other elements of the
related party transactions necessary to clarify the significance of these
transactions to its operations and sufficient to enable the financial
statements to provide relevant and reliable information for decision
making and accountability purposes”. An example of such a disclosure
would be an indication that the transfer of a major asset had taken
place at an amount materially different from that obtainable on normal
operating terms.
29. [Refer to Appendix 1]
30. [Refer to Appendix 1]
31. Paragraph 34 of this Standard requires additional disclosures to be
made about certain transactions between an entity and key
management personnel and/or the close members of the family of key
management personnel.
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Related Party Disclosures
32. Items of a similar nature may be disclosed in aggregate except
when separate disclosure is necessary to provide relevant and
reliable information for decision making and accountability
purposes.
33. Disclosure of related party transactions between members of an
economic entity is unnecessary in consolidated financial statements
because consolidated financial statements present information about
the controlling entity and controlled entities as a single reporting entity.
Related party transactions that occur between entities within an
economic entity are eliminated on consolidation in accordance with
ASLB 35, ‘Consolidated Financial Statements’5.
Disclosure — Key Management Personnel
34. An entity should disclose:
(a) The aggregate remuneration of key management personnel
and the number of individuals, determined on a full time
equivalent basis, receiving remuneration within this
category, showing separately major classes of key
management personnel and including a description of each
class;
(b) The total amount of all other remuneration and
compensation provided to key management personnel, and
close members of the family of key management personnel,
by the reporting entity during the reporting period showing
separately the aggregate amounts provided to:
(i) Key management personnel; and
(ii) Close members of the family of key management
personnel; and
(c) In respect of loans or advances which are not widely
available to persons who are not key management
personnel and loans or advances whose availability is not
5 ASLB 35 is yet to be formulated/ issued. The Guidance with regard to this subject
may be obtained from other corresponding pronouncements as per the hierarchy
prescribed in paragraph 15 of the ASLB 3, ‘Accounting Policies, Changes in
Accounting Estimates, and Errors’.
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Compendium of Accounting Standards for Local Bodies (ASLBs)
widely known by members of the public, for each individual
member of key management personnel and each close
member of the family of key management personnel:
(i) The amount of loans or advances given during the
period and terms and conditions thereof;
(ii) The amount of loans or advances repaid during the
period;
(iii) The amount of the closing balance of all loans,
advances and receivables; and
(iv) Where the individual is not a member of the
governing body or senior management group of the
entity, the relationship of the individual to such body
or group.
35. [Refer to Appendix 1]
36. Persons who are key management personnel may be employed on a
full or part time basis. The number of individuals disclosed as
receiving remuneration in accordance with paragraph 34(a) needs to
be estimated on a full time equivalent basis. Entities will make
separate disclosures about the major classes of key management
personnel that they have. For example, where an entity has a
governing body that is separate from its senior management group,
disclosures about remuneration of the two groups will be made
separately. Where an individual is a member of both the governing
body and the senior management group, that individual will be
included in only one of those groups for the purposes of this Standard.
The categories of key management personnel identified in the
definition of key management personnel provide a guide to
identifying classes of key management personnel.
37. Remuneration of key management personnel can include a variety of
direct and indirect benefits. Where the cost of these benefits is
determinable, that cost will be included in the aggregate remuneration
disclosed. Where the cost of these benefits is not determinable, a best
estimate of the cost to the reporting entity or entities will be made and
included in the aggregate remuneration disclosed.
38. Requirements on the measurement of employee benefits are found in
ASLB 39, ‘Employee Benefits’. When non-monetary remuneration that
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Related Party Disclosures
is able to be reliably measured has been included in the aggregate
amount of remuneration of key management personnel disclosed for
the period, disclosure would also be made in the notes to the financial
statements of the basis of measurement of the non-monetary
remuneration.
39. This Standard requires the disclosure of certain information about the
terms and conditions of loans or advances made to key management
personnel and close members of the family of key management
personnel, where these loans or advances:
(a) Are not widely available to persons outside the key
management group; and
(b) May be widely available outside the key management group but
whose availability is not widely known to members of the public.
The disclosure of this information is required for accountability
purposes. The exercise of judgment may be necessary in determining
which loans or advances should be disclosed to satisfy the
requirements of this Standard. That judgment should be exercised
after consideration of the relevant facts and in a manner consistent
with the achievement of the objectives of financial reporting.
40. Paragraph 34(a) of this Standard requires disclosure of the aggregate
remuneration of key management personnel. Key management
personnel include directors or members of the governing body and
members of the senior management group of the entity. Directors or
members of the governing body of the entity may also receive
remuneration or compensation from the entity for services provided in
a capacity other than as director or member of the governing body of
the entity or as an employee of the entity. Paragraph 34(b)(i) of this
Standard requires the disclosure of the total amount of this other
remuneration or compensation.
41. Close members of the family of key management personnel may
influence, or be influenced by, key management personnel in their
transactions with the reporting entity. Paragraph 34(b)(ii) of this
Standard requires the disclosure of the total remuneration and
compensation provided during the period to close members of the
family of key management personnel.
42-43. [Refer to Appendix 1]
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Illustrative Examples
The appendix is illustrative only and does not form part of the Standard. The
purpose of the appendix is to illustrate the application of the Standard to
assist in clarifying their meaning.
Disclosures — Local Body X
The following disclosures are made in the financial statements of Local Body
X.
Controlled Entities (Paragraph 25)
The Local Body controls the following reporting entities: Power distribution
entity, water supply entity and transport entity. Joint Ventures for Solid Waste
Management or other specific projects on PPP mode, entities for power
generation, water supply, transportation, etc.
(Note: ASLB 35 requires that certain disclosures be made about significant
controlled entities.)
Related Party Transactions (Paragraph 27)
A Councilor was provided with a motor vehicle, rent free. The provision of
vehicle is not part of the facilities to Councilor. However, in this case it was
necessary to provide a vehicle for the Councilor.
The business partner of a Councilor as an Advisor to the Local Body was
provided with a motor vehicle, rent free. Cars similar to that provided
normally rent for INR K per annum.
Key Management Personnel (Paragraph 34)
Remuneration (Paragraph 34(a))
The key management personnel (as defined by ASLB 20, ‘Related Party
Disclosures’) are the members of Council, who together constitute the
governing body of Local Body X. The aggregate remuneration of members of
the Council and the number of individuals determined on a full-time
equivalent basis receiving remuneration from Local Body X are:
Aggregate remuneration ` X crores.
Number of persons Y persons.
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Related Party Disclosures
Loans or advances that are not widely available (and/or widely known)
to persons outside the Key Management Group (Paragraph 34(c))
Amounts of such loans advanced and repaid during the period, and the
balances outstanding at the end of the period are outlined below:
Individual Advanced Repaid Balance
The Honorable ABC J K L
Ms. VSL M N P
D, the Commissioner Q R Z
Terms and Conditions
The Honorable ABC, Chairman of Taxation Committee, received a loan at
X% per annum, which is Y% below the market rate. The term of the loan is
for Z years.
Ms. VSL, Technical Advisor to Mayor, received a loan from Local Body. The
loan is for N years at X% per annum, the current Government borrowing rate.
The salary package of D, the Commissioner allow him to take out a
Government loan for up to A years at Y% per annum to purchase a car.
Other remuneration and compensation provided to key management
personnel and their close family members (Paragraph 34(b))
During the reporting period, total compensation of INR X amount was
provided to members of the Council for consulting services provided to
particular departments of the Local Body.
During the reporting period, the Local Body provided total remuneration and
compensation of INR Y amount to close family members of key management
personnel. This amount consists of the remuneration of Local Body
employees who are close members of the family of members of the Council.
Disclosure―Government Agency XYZ
These disclosures are made in the financial statements of Government
Agency XYZ, which is a separate reporting entity.
Controlled Entities (Paragraph 25)
The Agency is controlled by Local Body X.
The Agency controls the e-procurement services.
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(Note: ASLB 35 requires that certain disclosures be made about significant
controlled entities.)
Related Party Transactions (Paragraph 27)
The Agency provided a house, rent free, to the Councilor. Houses similar to
that provided to the Councilor rent for approximately INR Z per annum. The
house is not part of the remuneration package of the Councilor and, as a
matter of operating procedure, Local Bodies do not provide residential
accommodation to Councilors. However, Local Body X advised that the
house should be provided on this occasion.
Key Management Personnel (Paragraph 34)
Remuneration (Paragraph 34(a))
The key management personnel (as defined by ASLB 20) of Agency XYZ
are: the Minister, the members of the governing body and the Members of
the senior management group. The governing body consists of members
appointed by Local Body X; the chief executive officer and the chief financial
officer attend meetings of the governing body but are not members of the
governing body. The Minister is not remunerated by Agency XYZ. The
aggregate remuneration of members of the governing body and the number
of members determined on a full time equivalent basis receiving
remuneration within this category, are:
Aggregate remuneration AX crores.
Number of persons AY persons.
The senior management group consists of the Agency’s chief executive
officer, the chief financial officer, and the AZ heads of division. The
aggregate remuneration of members of the senior management group and
the number of managers determined on a full-time equivalent basis receiving
remuneration within this category are:
Aggregate remuneration AP crores.
Number of persons AQ persons.
Two division heads are on secondment from Local Body X and are
remunerated by Local Body X.
Loans or advances that are not widely available (and/or widely known)
to persons outside the key management group (Paragraph 34(c))
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Related Party Disclosures
Amounts advanced and repaid during the period and balance outstanding at
the end of the period:
Individual Advanced Repaid Balance
The Mayor J K L
Mr. G M N P
Ms. H Q R Z
Terms and Conditions
The Mayor received a loan of INR J at X% per annum, which is Y% below the
market rate. The term of the loan is for Z years.
The salary package of senior staff members Mr. G and Ms. H allows them to
take out a Government loan for up to N years at Y% per annum to purchase
a car.
Remuneration and compensation provided to close family members of
key management personnel (Paragraph 34(b))
During the reporting period, total remuneration and compensation of F
amount was provided by the Agency to employees who are close family
members of key management personnel.
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Appendix 1
Note: This Appendix is not a part of the Accounting Standard for Local
Bodies. The purpose of this Appendix is only to bring out the major
differences, if any, between Accounting Standard for Local Bodies (ASLB)
20, ‘Related Party Disclosures’ and the corresponding International Public
Sector Accounting Standard (IPSAS) 20, ‘Related Party Disclosures’.
Comparison with IPSAS 20, ‘Related Party Disclosures’
1. The following paragraphs of IPSAS 20 have been deleted. In order to
maintain consistency with the corresponding IPSAS 20, the paragraph
numbers have been retained.
(a) Paragraph 3 provides that Government Business Enterprises
(GBEs) should use IFRSs, has been deleted, as it is not
relevant for Local Bodies in India;
(b) Paragraph 17 relating to voting power has been deleted as the
Local Bodies may not have a corporate type structure;
(c) Paragraph 23 pertaining to disclosure for GBEs in some
countries, has been deleted as may not be relevant for Local
Bodies in India;
(d) Paragraphs 29 and 35 pertaining to disclosure of the information
about transactions between related parties that occur other than
on normal terms and conditions, have been deleted as
disclosure of all related party transactions has been made
mandatory in the ASLB 20;
(e) Disclosures of related party transactions prescribed under
paragraph 30 in IPSAS 20 have been merged with the
paragraph 27 in ASLB 20; and
(f) Paragraphs 42 - 43 pertaining to effective date have been
deleted as the ASLB 20 would become mandatory for Local
Bodies in a State from the date specified in this regard by the
State Government concerned.
2. The following paragraphs of IPSAS 20 have been amended and some
new paragraphs have been incorporated in ASLB 20 to make the
Standard more relevant in the context of Local Bodies in India:
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Related Party Disclosures
(i) To clarify that this ASLB applies to Local Bodies (refer
paragraph 2);
(ii) Explanation with regard to civil servants not qualifying as KMPs
in some jurisdictions has been deleted;
(iii) Disclosures that conflict with the confidentiality requirements of
a statue/regulations are not required to be made (insertion of a
new paragraph 15A);
(iv) Where there is an inherent difficulty for management to
determine the effect of influences that do not lead to the
transactions, disclosures of such effects are not required
(insertion of a new paragraph 20A); and
(v) Disclosure of all related party transactions have been made
mandatory (paragraphs 27, 28 modified and insertion of a new
paragraph 28A).
3. Some examples of IPSAS 20 have been deleted/ included in the ASLB
20, and some examples have been modified in the light of Indian
conditions.
(a) Management contracts including for deputation or employees’
has been added in the example of transactions that are
disclosed if they are with related party. (refer paragraph 28 (j)).
(b) Example in paragraph 29 has been modified in context of Local
Bodies in India.
(c) Illustrative Examples given in Appendix have been modified
suitably.
4. Different terminology as relevant for Local Bodies in Indian Context
such as ‘Governing Body’ in place of ‘Board of Directors’, ‘Local
Body/Entity’ in place of ‘Public Sector Entity’, etc., has been used in
ASLB 20.
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Compendium of Accounting Standards for Local Bodies (ASLBs)
Appendix 2
Note: This Appendix is not a part of the Accounting Standard for Local
Bodies. The purpose of this Appendix is only to bring out the major
differences, if any, between Accounting Standard for Local Bodies (ASLB)
20, ‘Related Party Disclosures’ and the corresponding existing Accounting
Standard (AS) 18, ‘Related Party Disclosures’.
Major differences between the ASLB 20, ‘Related Party
Disclosures’ and existing AS 18, ‘Related Party
Disclosures’
1. Existing AS 18 uses the term ‘relatives of an individual’, whereas the
ASLB 20 uses the term ‘a close member of the family of an individual’.
The definition of ‘close member of the family of an individual’ given in
ASLB 20 is wider than that is contained in existing AS 18, as
according to definition in ASLB 20 domestic partner, relative living in a
common household, grand-parent, grand-children, spouse or domestic
partner of child, parent-in-law, brother-in-law or sister-in-law are also
covered under ‘close members of a family of an Individual’.
2. Existing AS 18 covers ‘Key Management Personnel (KMP)’ of the
entity only, whereas in addition the ASLB 20 covers the member of
governing body of Central/ State Government and any key advisors of
that member.
3. ASLB 20 includes a definition of ‘remuneration of key management
personnel’. Existing AS does not include this definition.
4. Paragraph 36 of ASLB 20 requires extended disclosures for
compensation of KMP under different categories, whereas the existing
AS 18 does not specifically require.
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