Exciting Milestone Achieved: Publication of the GRAP 20 Related Party Disclosures Review Report | Exciting Milestone Achieved: Publication of the GRAP 20 Related Party Disclosures Review Report |
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| We are pleased to announce the publication of the review report on GRAP 20 Related Party Disclosures. The review report summarises the issues, root causes and outcomes from a desktop review that assessed the application of GRAP 20. This included to evaluate how preparers disclose related party relationships and transactions, and the Board’s responses to the issues identified.
The key issue from the review is that stakeholders face challenges in correctly identifying related party relationships and related party transactions, as defined in GRAP 20. This complexity generally arises from the need to exercise judgement in certain areas. |
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| Identifying related parties: Determining if individuals are part of management or if entities have control, joint control or significant influence over the reporting entity, or vice versa. Issues include uncertainty about whether audit and risk committee members, traditional leaders and councillors meet the related party definition. Disclosure of related party transactions and relationships: Ensuring that all relationships, transactions and outstanding balances with related parties are disclosed in the financial statements as required by GRAP 20. Specifically, it can be challenging to determine which transactions to disclose for councillors’ remuneration, outstanding balances, commitments, and goods provided in-kind to related parties. Materiality considerations: Applying materiality to determine the related party transactions and disclosures to report in the financial statements is challenging as judgement is required. |
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The Board has identified key actions that will be taken to provide guidance to stakeholders. These actions aim to improve the identification and disclosure of related party relationships and transactions: Amendments to GRAP 20: As the authoritative source of guidance, the Standard will be amended to explain the relationship between the three spheres of government and clarify which entities could be considered related parties. Develop non-authoritative guidance: Frequently Asked Questions (FAQs) will be developed by the Secretariat to provide guidance on principles contained in the Standard. Raise awareness on available guidance: Access recordings on the ASB's YouTube channel, which explain the basic principles and how they can be applied in financial reporting. For more insights on the outcomes of the review, we invite you to read the full report here.
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