Page 2 - 24. COMPILER QB - IND AS 24

INDAS – 24

RELATED PARTY DISCLOSURES

(TOTAL NO. OF QUESTIONS – 8)

INDEX

S.No. Particulars Page No.
1 RTP Questions 24.1

2 MTP Questions 24.5

RTPs QUESTIONS

Q1 (RTP May 18 & MTP May 20)

Mr. Atul is an independent director of a company X Ltd. He plays a vital role in the Management of X Ltd.
and contributes in the major decision-making process of the organisation. X Ltd. pays a sitting fee of Rs

2,00,000 to him for every Board of Directors’ (BOD) meeting he attends. Throughout the year, X Ltd. had 5
such meetings which were attended by Mr. Atul.
Similarly, a non-executive director, Mr. Naveen also attended 5 BOD meetings and charged Rs 1,50,000 per
meeting. The Accountant of X Ltd. believes that they being not the employees of the organisation, their fee
should not be disclosed as per related party transaction in accordance with Ind AS 24.
Examine whether the sitting fee paid to independent director and non-executive director is required to be

disclosed in the financial statements prepared as per Ind AS?
SOLUTION

As per Ind AS 24, Related Party Disclosures, “Key management personnel are those persons having authority
and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly,
including any director (whether executive or otherwise) of that entity.”
Accordingly, key management personnel (KMP) includes any director of the entity who has authority and
responsibility for planning, directing and controlling the activities of the entity. Hence, independent director

Mr. Atul and non-executive director Mr. Naveen are covered under the definition of KMP in accordance with
Ind AS.
Also as per Ind AS 19, ‘Employee Benefits’, an employee may provide services to an entity on a full-time,
part-time, permanent, casual or temporary basis. For the purpose of the Standard, Employees include directors

and other management personnel.
Therefore, contention of the Accountant is wrong that they are not employees of X Ltd.
The Ind AS requires disclosure about employee benefits for key management personnel. Therefore, an entity

24.1