a Objective

The stated objective of FRS 8 is to "ensure that financial statements contain the disclosures necessary to draw attention to the possibility that the reported financial position and results may have been affected by the existence of related parties and by material transactions with them". FRS 8 aims to achieve this objective by requiring:

1. specified disclosures of transactions and balances with related parties; and

2. disclosure of control, i.e. the name of the party controlling the reporting entity and, if different, that of the ultimate controlling party. This disclosure of control is required whether or not any transactions between the reporting entity and the controlling parties have taken place.

b Scope

FRS 8 applies to all financial statements that are intended to give a true and fair view of a reporting entity's financial position and profit or loss for a period. Specific exemptions from disclosure are referred to below.

c Small Companies

Shareholders' accounts of small companies, even those exempt from audit, are not exempt from FAS 8, but may adopt the Financial Reporting Standard for Smaller Entities (FRSSE) see 22.4.

Small company abbreviated accounts must include the relevant CA 1985 disclosures but need not include those of FRS 8. However, abbreviated accounts of medium-sized companies are required to show a true and fair view and must therefore include the necessary disclosures.

a Introduction

The definition of related parties occupies two pages of the Standard and has two main strands:

1. "deemed"...