The international definition of a related party is centred on the ability of one party to control or exercise influence over the operating and financial decisions of another. This includes:

• Enterprises controlling, controlled by, or under common control with the reporting enterprise

• Associates

• Individuals who directly or indirectly own an interest in the voting power of an entity sufficient to exercise influence - this rule extends to the close family members of such an individual

• Key management personnel

• Enterprises in which a substantial interest in the voting power is owned, directly or indirectly, by the individuals or key management referred to above.

Under UK GAAP the definitions look broadly similar but caution is needed. Let us examine the UK definition and match as appropriate to its IAS counterpart.

Directly comparable to IAS guidance
Parties are related if:	Comments
One party has direct control over another
One party has indirect control over another
Parties are subject to common control
One party has influence over the other
There is no comparable situation described under IAS rules.
The parties, in entering a transaction, are subject to influence from the same source to such an extent that one of the parties to the transaction has subordinated its own separate interest

FRS 8 contains listings of deemed and presumed related parties that is more comprehensive than that described by IAS requirements, and hence there is a possibility of an entity or individual qualifying as a related party under the former and yet...