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Section 33 – Introduction

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Section Downloads

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Contents

33.1 Scope.

33.2 Exclusions from Section 33 requirements – Wholly owned entities within the group.

33.2.1 Extract from FRS102: Section 33.1A.

33.2.2 OmniPro comment

33.3 Related party defined – Persons/Individuals.

33.3.1 Extract from FRS102: Section 33.2(a)

33.3.2 OmniPro comment

33.3.2.1 Overview.

33.3.2.2 Persons of close members of that person’s family.

33.3.2.2.1 Control, joint control and significant influence.

33.3.2.2.2 Close family members defined.

33.2.2.3 Key management personnel

33.2.2.4 Examples of close family members.

33.4 Related party defined – Entities.

33.4.1 Extract from FRS102: Section 33.2 (b) and Section 33.4.

33.4.2 OmniPro comment

33.4.2.1 Overview.

33.4.2.2.1 Entities are members of a group.

33.4.2.2.2 One entity is an associate or joint venture of the other or one entity is a joint venture of a third entity and the other entity is an associate of the third party.

33.4.2.2.3 Both entities are joint venture of the same third party.

33.4.2.2.4 Entity is controlled by a person that has control or significant influence or joint control or is a member of key management over/in the reporting entity.

33.4.2.2.5 Person has control or joint control of the reporting entity has significant influence over the other entity or is a member of key management personnel of the other entity.

33.4.2.2.6 Transactions with a subsidiary of a joint venture or associate.

33.4.2.2.7 Pension funds.

33.4.2.2.8 Provision of managements services by an entity or any member of a group of which it is part to the reporting entity or to the parent of the reporting entity.

33.5 Specific related party exclusions.

33.5.1 Extract from FRS102: Section 33.3-33.4.

33.5.2 OmniPro comment

33.5.2.1 Overview.

33.5.2.2 Relationships that are not related parties.

33.6 Disclosures.

33.6.1 Disclosure of parent-subsidiary relationships.

33.6.1.1 Extract from FRS102: Section 33.5.

33.6.1.2 OmniPro comment

33.6.2 Disclosure of key management personnel compensation.

33.6.2.1 Extract from FRS102: Section 33.6 – Section 33.7.

33.6.2.2 OmniPro comment.

33.6.2.2.1 Key management personnel defined.

33.6.2.2.2 Key management personnel and directors remunerated by other groups entities or shareholders – the disclosures.

33.6.2.2.2.1 Directors duties merely incidental and incurred by parent entity.

33.6.2.2.2.1.1 Possible disclosure in financial statements where directors duties are incidental

33.6.2.2.3 Sample key management personnel disclosure.

33.6.3 Disclosure of related party transactions.

33.6.3.1 Extract from FRS102: Section 33.8-33.14.

33.6.3.2 OmniPro comment.

33.6.3.2.1 Overview.

33.6.3.2.2 Rules on disclosure of items being on an arm’s length basis.

33.6.3.2.3 Disclosures where subsidiaries/ associates/ joint ventures acquired or disposed of in the period

33.6.3.2.4 Examples of related parties to be disclosed.

33.6.3.2.5 Illustrations of the related parties required by Section 33.8 to 33.14 of FRS102.

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Section 33: Relates Party Disclosures

Summary

Section 33 deals with disclosures required for all related party transactions and includes the definition of related parties.

What is new?

Section 33.10 requires related party transactions to be disclosed separately for each of the below categories whereas old GAAP allowed aggregated:

What is different?

Section 33 requires the disclosure for pension contributions paid into a pension fund. There was no such requirement under old GAAP (FRS 8) however, it was required under FRS 17 so it would have been disclosed in any event.

Section 33 requires disclosure of key management personnel compensation in total. This is in additional to the requirements of Company Law in relation to directors’ remuneration and transactions with connected persons.

The section also provides no exemption on the grounds of confidentiality. Under old GAAP, disclosure was not required on the basis of confidentiality which was imposed by statute or entity law.

Section 33.11 provides an exemption from disclosure about related party transactions with a related party that is a state (a national regional or local government) that has control, joint control or significant influence over the reporting entity.

What are the key points?

A related party is a person or entity that is related to the entity that is preparing its financial statements (the reporting entity). Section 33.2 provides a detailed definition of related parties:

  1. A person or a close member of that person’s family is related to a reporting entity if that person:
  1. An entity is related to a reporting entity if any of the following conditions apply:

Disclosures are not required of transactions between group members, providing that any subsidiary involved is wholly owned (Section 33.1A).

Disclosure is required of the name of the parent entity and if different, the ultimate controlling party.

What do accountants need to do?

Be aware of the differences between old GAAP and Section 33 mentioned above and ensure FRS 102 financial statements are compliant with these additional disclosures. Advise clients of the additional disclosures that are required.

What do Companies need to do?

Be aware of the differences between old GAAP and Section 33 mentioned above and ensure FRS 102 financial statements are compliant with these additional disclosures.

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Examples

Example 1: Wholly owned group exemption. 

Example 2: Group exemption. 

Example 3: Close family members. 

Example 4: Close family members. 

Example 5: entities are members of a group (Section 33.2(b)(I of FRS 102)) 

Example 6: One entity is an associate or joint venture of the other or one entity is a joint venture of a third entity and the other entity is an associate of the third party (Section 33.2(b)(ii) & (iv) 

Example 7: Both entities are joint venture of the same third party (Section 33.2(b)(iii)) 

Example 8: Entity is controlled by a person that has control or significant influence or joint control or is a member of key management over/in the reporting entity, (Section 33.2(b)(vi)) 

Example 9: Person (has control or joint control of the reporting entity) has significant influence over the other entity or is a member of key management personnel of the other entity (Section 33.2(b)(vii) of FRS102. 

Example 10: Transactions with a subsidiary of a joint venture or associate. 

Example 11: Pension funds (Section 33.2(b)(v)of FRS102) 

Example 12: Provision of managements services by an entity or any member of a group of which it is part to the reporting entity or to the parent of the reporting entity (Section 33.2 (viii) of FRS102) 

Example 13: Extract from notes to the financial statements. 

Example 14: Extract from notes to the financial statements. 

Example 15: Extract from the notes to the financial statements. 

Example 15A: Disclosure of amounts due from/to group entities and related party balances including amounts due to/from directors. 

 

 

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Section 33 – Practical Examples – Related Party Disclosures

 

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Section 33 Detailed Guide

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