16-36 – Financial reporting obligations – AASB 124 Related party disclosures

What’s new or changing

  • As advised during the Code of Accounting Practice and Financial Reporting (Code) Update 24 consultation process, the Australian Accounting Standards Board has determined that, from 1 July 2016, AASB 124 related party disclosures will apply to government entities, including local governments.
  • In the annual financial statements for 2016-17, councils must disclose related party relationships, transactions and outstanding balances, including commitments.

What this will mean for your council

  • Related parties are likely to include the mayor, councillors, general manager, senior executives, their close family members and any entities controlled or jointly controlled by councils.
  • Any transactions between councils and these parties, whether monetary or otherwise, will need to be identified and may need to be disclosed.
  • This information will be audited as part of the annual external audit.
  • From 1 July 2016 councils should have systems in place to identify related parties and capture transactions. Comparatives are not required.

Key points

  • In the financial reporting period beginning 1 July 2016, related party relationships and transactions with key management personnel, their close family members and council-related entities, will need to be identified and may need to be disclosed in councils’ financial statements.

Where to go for further information

  • The Office of Local Government is hosting a webinar on Wednesday 12 October 2016 (11:30am to 12:30pm) to provide further guidance on related party disclosures and assist councils in meeting their requirements.
  • Council finance staff, general managers, other key management personnel and key stakeholders are encouraged to participate.
  • Details on how to participate in the webinar are provided at Attachment A.

Tim Hurst
Acting Chief Executive