Related party transactions

Discussion in 'Accounts & Finance' started by Jaydee, Jun 25, 2009.

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  1. Jaydee

    Jaydee UKBF Enthusiast Free Member

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    Following on from my other thread on the matter (probably only interesting for accountants this one!), but I understand that special mention has been made for future practice assurance visits to ensure that dividends paid to shareholder/directors are disclosed in the related party transaction note - as it has been identified that a significant majority of filed accounts do not do so at present.

    I won't ask for a poll of firms that do or don't!
     
    Posted: Jun 25, 2009 By: Jaydee Member since: May 27, 2007
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  2. Alpha

    Alpha UKBF Newcomer Full Member

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    Actually I've been mentally going through all those accounts from other accountants that I've received over the years and cannot recollect any accounts with dividends being included in the related party notes and that includes accounts from some large accountancy firms:)

    I don't mind admitting that I don't:eek:(However the information could be easily gleaned from the controlling party note and directors)
     
    Posted: Jun 25, 2009 By: Alpha Member since: Feb 16, 2004
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  3. Jaydee

    Jaydee UKBF Enthusiast Free Member

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    Don't worry Alan, I am sure that the reason that it has been flagged up is that nobody has ever seen such a disclosure! I knew that my poll would be very lop-sided.

    However, since there is no longer a disclosure requirement to show directors' interests in the share capital in the directors' report, you actually cannot any longer calculate the value of dividends paid to directors.

    OK, you can see that the directors are the ultimate controlling party from that note, but they still could have received anywhere between 51% and 100% of the disclosed dividend figure.
     
    Posted: Jun 25, 2009 By: Jaydee Member since: May 27, 2007
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  4. Alpha

    Alpha UKBF Newcomer Full Member

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    I was actually wondering what firms actually did put it in the notes:)
     
    Posted: Jun 25, 2009 By: Alpha Member since: Feb 16, 2004
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  5. David Griffiths

    David Griffiths UKBF Legend Full Member - Verified Business

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    I don't. Where is the requirement to do so?

    A course that we went on recently flagged up things that are causing the Institute knicker-twisting grief. The areas highlighted were:

    Accounting policies on revenue recognition
    valuation of stock
    transactions with directors and related parties- but no mention of dividends
    ultimate controlling party
    personal guarantees by directors


    Our final accounts checklist doesn't mention this, and looking up a reference book on FRS 8 doesn't mention it.
     
    Posted: Jun 25, 2009 By: David Griffiths Member since: Jun 21, 2008
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  6. David Griffiths

    David Griffiths UKBF Legend Full Member - Verified Business

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    Or even somewhere between 0 and 50% if the control the ultimate holding company. :D
     
    Posted: Jun 25, 2009 By: David Griffiths Member since: Jun 21, 2008
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  7. Jaydee

    Jaydee UKBF Enthusiast Free Member

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    There are a number of views, both for and against at http://www.accountingweb.co.uk/item/188423

    ...but as I understand that this is a hot topic with the monitoring units at the moment, you may wish to err on the side of caution and disclose, or else simply retain a file note as to why you believe it is not reportable and argue your corner if challenged.
     
    Posted: Jun 25, 2009 By: Jaydee Member since: May 27, 2007
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