What are the best practices for disclosing related-party transactions?

In Kenya, Related-Party Transactions (RPTs) are transactions between a company and its related parties, including key management personnel, close family members, and entities under significant influence or control of key personnel. These transactions must be disclosed in accordance with the applicable accounting standards, such as IFRS or Kenyan GAAP. Disclosure notes in financial statements should detail the nature, volume, outstanding balances, and terms of RPTs, ensuring transparency and compliance with regulatory requirements.

As an external auditor we used to enquire of existing processes for identifying RPs and then cross-checked this to shareholders registers, minutes, correspondences and some internal DBs. The entities should have robust system for identifying RPs- the common ones should be captured through shareholders’ registers, key management personnel roster, list of investees. While the update should be maintained through systematic declarations of key management personnel, any changes to structure of shareholders and investees should be communicated and documented appropriately

Related party refers to individuals or entities that are closely associated with each other due to their relationship or association. In the Indian regulatory environment, related party transactions are governed by the Companies Act, 2013, and the Securities and Exchange Board of India (SEBI) regulations. Understanding and complying with related party transaction regulations is crucial for companies operating in India to maintain transparency, accountability, and trust among stakeholders and regulators.

In my experience, mastering Related Party Transactions (RPTs) is like being a corporate wizard. 🧙♂️ First step: craft clear rules and definitions as your magic spells. Then, conjure an independent council to guard these treasures, ensuring they're wielded for the greater good. It's not just compliance—it's creating a realm of trust and integrity. #CorporateWizardry #RPTMagic

In Kenya, disclosure of related-party transactions is governed by accounting standards and regulations set by bodies like the Institute of Certified Public Accountants of Kenya (ICPAK) and the Companies Act. Entities must clearly identify related parties and provide comprehensive disclosures in financial statements, including nature of relationships, transaction volumes, outstanding balances, and terms. Transactions should be conducted at arm's length and fair value. Robust governance mechanisms, internal controls, and external audit reviews are essential to ensure transparency and compliance.

As a reporting entity we adhere to IAS24 clauses on transactions with RPs to be disclosed given the materiality considerations. Given the complete list of RPs accountants should capture the transactions and balances with the latest and disclose if material

When disclosing related party transactions, companies must adhere to stringent regulatory requirements to ensure transparency and prevent conflicts of interest. These regulations aim to safeguard the interests of vast stakeholders and maintain the integrity of financial reporting.

In my experience, disclosing Related Party Transactions (RPTs) is akin to storytelling with a financial twist. 📚💼 It’s about pulling back the curtain to reveal not just the 'what' and 'who,' but the 'how' and 'why' behind these transactions. Think of it as crafting a tale where every detail—from the nature and amount of the transactions to the impact on the company’s ledger—is narrated with clarity and integrity. It’s not just about meeting requirements; it’s about weaving transparency into the fabric of financial reporting. #FinancialStorytelling #TransparencyTales #RPTsUnveiled

On top of disclosure the reporting entity should communicate the terms and conditions of the RP transactions. The default starting point that RP transactions are non-market transactions. If so, the main terms should be thoroughly disclosed and communicated

Related-party transactions in Kenya refer to exchanges of goods, services, or financial instruments between a company and its related parties, which could include key management personnel, close family members, or entities under significant influence or control of key personnel. These transactions may not always occur at arm's length and can potentially impact the company's financial position, performance, and disclosures. Disclosure of related-party transactions is crucial for transparency and fair financial reporting, ensuring stakeholders have a clear understanding of potential conflicts of interest and the nature of these transactions.

Related party transactions (RPTs) serve various purposes and can offer several benefits, but they also present potential risks that need careful management. Here's an explanation of the rationale and benefits of RPTs: 1. RPTs often occur due to the convenience and efficiency of dealing with parties who have existing relationships or shared interests. 2. Related parties may provide access to resources, expertise, or assets that are not readily available elsewhere. 3. In some cases, engaging in transactions with related parties can result in cost savings or favorable terms compared to dealing with unrelated third parties. 4. RPTs can provide companies with greater flexibility and control over their operations.

In my experience, explaining Related Party Transactions (RPTs) is about telling a compelling story to your audience. It’s showing them how each RPT is a strategic move on the company's chessboard, aimed at growth and resilience. 🏰🌿 You're painting a picture where RPTs align with the company’s grand vision, while also being upfront about the dragons—potential risks and conflicts—and how you’re equipped to tame them. This approach doesn’t just inform; it builds trust through clarity and intention. #StrategicNarratives #BuildingTrust #RPTsDemystified

Given the previous step is performed properly all deviations from standard terms should be disclosed and reported accordingly, especially transactions not on arm’s length

Comparing related party transactions (RPTs) with prevailing market rates is essential to ensure fairness, transparency, and compliance with regulatory standards. When conducting such comparisons, companies aim to demonstrate that transactions with related parties are conducted on an arm's length basis, meaning they are priced or structured similarly to transactions between unrelated parties in the open market. Additionally, regulatory bodies, including the SEBI, require companies to disclose details of RPTs and provide explanations for any deviations from prevailing market rates. By comparing RPTs, companies uphold principles of corporate governance, maintain regulatory compliance, and foster trust among investors and the broader market.

Related-party transactions in Kenya, like in many jurisdictions, require strict adherence to accounting standards and regulatory frameworks. Under the Companies Act and guidelines from the Institute of Certified Public Accountants of Kenya (ICPAK), companies must disclose related-party transactions transparently in their financial statements. These transactions involve entities or individuals with close affiliations to the company, such as key management personnel, their close family members, and entities under their significant influence or control.. Disclosure requirements include detailing the nature of relationships, transaction volumes, outstanding balances, and terms.

Hey fam, let's talk about keeping it real with Related Party Transactions (RPTs). 🌟 Imagine giving your RPTs a reality check against the market vibes. It's like ensuring your moves are on point, fair, and straight-up legit, just like comparing your outfit to the latest trends! 🕺✨ And if things look a bit different? I'm all about bringing the receipts, showing that every unique choice has the company's best interests at heart. It's not just about following rules; it's about leading with transparency and trust. Keep it 100, team! #KeepingItReal #MarketCheck #TrustTheProcess

Updating the related parties list involves identifying and documenting any changes in the relationships between the company and its associated individuals or entities. This process is essential for maintaining accurate and up-to-date records, ensuring compliance with regulatory requirements, and effectively managing potential conflicts of interest. Regularly updating the related parties list allows companies to stay abreast of changes such as new appointments, resignations, acquisitions, or divestitures that may impact their related party transactions. This information serves as a vital reference for disclosures in financial statements, board approvals, and monitoring procedures.

In Kenya, disclosing related-party transactions is essential for financial transparency. As per accounting standards, companies must identify and disclose transactions with related parties, including key management personnel and their close family members. These disclosures should detail the nature, volume, terms, and outstanding balances of such transactions, ensuring they are conducted at arm's length and fair market value. Robust governance mechanisms, internal controls, and independent oversight are crucial to mitigate risks and ensure compliance. Transparency and integrity in related-party transactions bolster trust and credibility in financial reporting, enhancing investor confidence and stakeholder trust.

Hey tribe, let's dive into the game of keeping our RPT disclosures fresh and on point. 🚀 Imagine your RPTs are like your feed—constantly evolving, always needing the latest updates to stay relevant. Whether it's a plot twist in the transaction terms or a new character entering the scene, staying alert and reporting the changes is key. 🔄✨ It’s about ensuring every snapshot of your RPTs is crisp, clear, and tells the real story, no filters needed. Consistency? Accuracy? Completeness? That’s the trilogy of trust we live by. Keep your disclosures as dynamic as your stories, folks! #StayUpdated #RPTsInRealTime #DisclosureDynamics

Hey squad, let’s chat about leveling up our RPT game with something crucial: audits. 🕵️♂️ Think of it as having an external guru come in, take a deep dive into your RPTs, and make sure everything is legit, fair, and above board. It’s about checking the vibes, making sure the controls and governance around RPTs are tight and right. 🛡️✨ And when they share their wisdom—those findings and recommendations? It’s all about transparency, taking action, and always aiming higher. Because keeping it real and improving is what we’re all about. Let’s make those RPTs audit-proof and shine! #AuditGoals #TransparencyTribe #ElevateAndServe