Related party disclosures
In one sentenceA note in the financial statements showing the nature of the relationship with each related party, the period's transactions with it and the balances at period end, and key management compensation.
Simply put
The aim is for the reader to know that part of your figures came from dealings not necessarily on market terms, so they can judge them for themselves.
The note usually states: the party's name or category, the type of relationship, the type of transaction (purchase, sale, financing, lease), its amount during the year, and the balance due at year end.
Example
A trading company's note states: “The company purchased goods amounting to 900,000 SAR from a sister company owned by one of the partners, and the balance due to it at year end is 150,000 SAR”, in addition to the salaries and bonuses of the general manager.
Don't confuse it with
Related partiesIdentifying the parties is the first step, and the disclosure is the final presentation of what took place with them.