Summarising the requirements for disclosure of related party transactions.
The charity SORP states that if ‘there have been no related party transactions in the reporting period that require disclosure, this SORP requires that this fact must be stated'.
Where a related party transaction is identified, a ‘reporting charity must not state that related party transactions were made at open market value or on terms equivalent to those that prevail in arm’s length transactions unless such terms can be substantiated'.
However, the following must be disclosed:
‘the description of a relationship between the parties (including the interest of the related party or parties in the transaction)
a description of the transaction(s)
the amounts involved
outstanding balances with related parties at the reporting date and any provisions for doubtful debts
any amounts written off from such balances during the reporting period
the terms and conditions, including any security and the nature of the consideration to be provided in settlement; and details of any guarantees given or received
any other elements of the transactions which are necessary for the understanding of the accounts; and
…. the disclosure of the name(s) of the transacting related party or parties.’
It is also stated that the required disclosure ‘may be given in total for similar transactions and type of related party except where disclosure of an individual transaction or connected transactions:
is necessary for an understanding of the impact of the transactions on the accounts of the charity; or is required by law.’