SFRS(I) 1-24 requires disclosure of related party relationships, transactions, and outstanding balances (including commitments) in an entity's financial statements. Related party relationships — a parent, subsidiaries, associates, key management personnel, and so on — can affect an entity's financial position and results, and transactions with related parties may not occur on the same terms as with independent parties. The standard requires that they, and the relationships behind them, be disclosed so users can understand their potential effect. It is the Singapore equivalent of IAS 24 under IFRS.
Objective and scope
The objective is to ensure that an entity's financial statements contain the disclosures necessary to draw attention to the possibility that its financial position and profit or loss may have been affected by the existence of related parties and by transactions and outstanding balances with them. The standard requires disclosure; it does not deal with the recognition or measurement of related party transactions.
Who is a related party
A related party is a person or entity related to the reporting entity. A person or a close member of that person's family is related if that person has control or joint control of, has significant influence over, or is a member of the key management personnel of the reporting entity or of its parent. An entity is related in various circumstances — for example, members of the same group (parent, subsidiary, fellow subsidiary); an associate or joint venture of the other; a post-employment benefit plan for employees of the entity or a related entity; or an entity controlled or jointly controlled by a person with control, joint control, or significant influence over the reporting entity.
Key management personnel (KMP) are those persons having authority and responsibility for planning, directing, and controlling the activities of the entity, directly or indirectly, including any director.
What must be disclosed
Relationships involving control are disclosed irrespective of whether there have been transactions between the parties. An entity discloses the name of its parent and, if different, the ultimate controlling party.
Key management personnel compensation is disclosed in total and analysed by category: short-term employee benefits, post-employment benefits, other long-term benefits, termination benefits, and share-based payment.
Related party transactions, if any, are disclosed — the nature of the relationship, and the amount of the transactions and outstanding balances (including commitments), their terms and conditions and any guarantees, provisions for doubtful debts, and the related bad-debt expense — separately for each category of related party.
The Singapore context
For Singapore companies, related party disclosures operate alongside the Singapore Companies Act and, for listed entities, the SGX listing rules, which contain their own requirements on interested person transactions (IPTs) — transactions between a listed issuer (or its subsidiaries) and interested persons. The SGX IPT regime is a separate, additional disclosure and approval framework with its own definitions and thresholds. An entity may need to comply both with the accounting disclosures under SFRS(I) 1-24 and with the SGX rules on interested person transactions; the two overlap but are not identical, and both should be considered.
A worked example
A Singapore company is 60% owned by a parent, pays management fees to the parent, buys materials from a fellow subsidiary, and pays remuneration to its key management personnel:
| Item | Related party category | Disclosure required |
|---|---|---|
| 60% parent | Parent | Name of parent and ultimate controlling party — even with no transactions |
| Management fees paid to parent | Parent | Nature, amount, outstanding balance, terms |
| Materials bought from fellow subsidiary | Fellow subsidiary | Nature, amount, outstanding balance, terms |
| Director and executive remuneration | Key management personnel | Compensation by category (short-term, post-employment, other long-term, termination, share-based) |
The company discloses its parent and ultimate controlling party (regardless of transactions), discloses KMP compensation split into the required categories, and discloses the nature and amounts of the transactions with the parent and fellow subsidiary along with outstanding balances and terms — separately for each category. If SGX-listed, it separately assesses whether any transactions are interested person transactions requiring disclosure or approval under the listing rules.
How SFRS(I) 1-24 relates to IFRS
SFRS(I) 1-24 is identical to IAS 24 under IFRS — the same definition of related parties, the same requirement to disclose controlling relationships even absent transactions, the same KMP compensation breakdown, and the same government-related-entity relief. An entity familiar with IAS 24 will find SFRS(I) 1-24 to be the same standard.
Common pitfalls
Recurring issues include failing to disclose the parent and ultimate controlling party where there were no transactions; not breaking down KMP compensation by the required categories; overlooking related parties such as close family members of KMP or post-employment benefit plans; and, for listed entities, conflating the SFRS(I) 1-24 disclosures with the separate SGX interested-person-transaction requirements.
Why this is cleaner on a unified system
Identifying and disclosing related party transactions requires being able to flag and total transactions with the relevant parties across the entity — far easier when all transactions are captured in one connected system where counterparties can be tagged consistently. When the ledger holds a single source of truth with related parties identified, and where KMP compensation flows through the same payroll and accounting system, extracting transaction amounts, outstanding balances, and the categorised KMP compensation for disclosure is more straightforward than searching across separate tools.
This article is a detailed educational summary of SFRS(I) 1-24 in plain language. It is not a substitute for the full text of the standard. Accounting standards are amended from time to time; always verify the current, authoritative text of SFRS(I) 1-24 as issued by the Singapore Accounting Standards Council before relying on it, and consult a qualified professional accountant for application to your specific circumstances.