Related party transactions disclosure and procedures: a critical analysis in business groups

Purpose In the light of the risks involved in related party transactions, transparent disclosure is particularly important. The impact of related party transactions is relevant for all types of company, but there is greater complexity in business groups where they can be easier to hide. Focusing on business groups, this study aims to analyze the accuracy and transparency of related party transaction information, its understandability, compliance with legislation and comparability. It also examines whether shareholders can be fully informed of all related party transactions by reading only the consolidated financial statement. Design/methodology/approach Three case studies are used. The units of analysis are three corporate groups in which the parent company is listed on the Milan Stock Exchange as of 1 July 2015. The authors use two different sets of information. The first is secondary data from company procedures, annual reports and other official documents. They analyzed the separate financial statement of each firm, including the separate financial statement of the parent company and compared all relevant information from the consolidated financial statement and the separate financial statement. The second set is primary data from face-to-face semi-structured interviews and observation. Findings This study underlines that there is no requirement for a specific classification of related party transactions disclosure, and as a consequence, it is not possible to compare information. An unambiguous framework for disclosure, established by regulation or legislation, for use by companies supplying related party transactions information would be useful. Originality/value The results offer possible recommendations for regulators to improve presentation of related party transaction information without increasing the amount of information required.

Features of consolidation of pension plans and pension funds within the group of entities in accordance with IFRS

The article discusses the recognition and disclosure of corporate pension plans of groups in a separate and consolidated financial statement in accordance with IFRS. The procedure of consolidation of the private pension funds, established by group and running its pension plans has been reviewed and recommendations has been suggested. The effect of incorporation of pension funds on the consolidated financial statements of the group has been revealed.

Features of consolidation of pension plans and pension funds within the group of entities in accordance with IFRS

The article discusses the recognition and disclosure of corporate pension plans of groups in a separate and consolidated financial statement in accordance with IFRS. The procedure of consolidation of the private pension funds, established by group and running its pension plans has been reviewed and recommendations has been suggested. The effect of incorporation of pension funds on the consolidated financial statements of the group has been revealed.

Voluntary adoption of the consolidated financial statement and fair value accounting by italian local governments

The paper focuses on the potential benefits of fair value accounting (FVA) in the public sector and the shift towards the entity theory of consolidation supported by international accounting standards. The analysis of the Italian cases shows neither adjustments of the assets to their fair value, nor any recognition of intangibles other than goodwill in consolidated financial statement (CFS), maintaining the configuration of a municipal corporate group based on historical costs. These findings suggest a lack of focus on FVA by local governments (LGs), which is in contrast with international accounting standards. Using a combination of sources (such as annual reports and interviews), part of this paper is based on multiple-case studies of Italian LGs on the voluntary adoption of CFS.