The AASB has recently issued an amended version of AASB 124 Related Parties that is mandatorily applicable to annual reporting periods commencing 1 January 2011, although early adoption is available.

The amendments clarify the definition of a ‘related party’ such that the following shall now be considered related parties:

• a subsidiary and an associate with the same investor shall be considered related parties of each other where an investor has an investment in a first entity that is a jointly controlled entity as well as an investment in a second entity that
• is either an associate or jointly controlled entity, the first and second entities shall be considered related parties of each other.

The following are excluded from being considered related parties:

• entities significantly influenced by one person and entities significantly influenced by a close member of the family of that person are no longer related parties of each other.

The standard now also specifically addresses government related entities. A partial exemption is provided from disclosure of related party transactions with:

• a government that has control, joint control or significant influence over the reporting entity
• another entity that is a related party by virtue of being controlled or significantly influenced by that same government.

In these instances, a description is required of:

• the name of the government
• the nature of the relationship
• individually significant transactions
• a qualitative or quantitative indication of the extent of transactions that are collectively significant
• company must prepare a financial report and a streamlined directors’ report (rather than a full directors’ report)
• can elect to have the financial report reviewed rather than audited.