CRTC Telecommunications Industry Data Collection
Frequently asked Questions - 2006
CCM Forms (6XX)
What is section 3840 of the CICA Handbook?
Section 3840 of the Canadian Institute of Chartered Accountants'
Handbook (CICA) relates to the identification and treatment of
related parties for accounting purposes.
What is the definition of related parties?
Section 3840.03 (g) of the CICA Handbook provides for following
definition of related parties.
Related parties exist when one
party has the ability to exercise, directly or indirectly,
control, joint control or significant influence over the other.
Two or more parties are related when they are subject to common
control, joint control or common significant influence. Related
parties also include management and immediate family members
(see paragraph 3840.04).
How do I identify related parties?
Section 3840.04 of the CICA Handbook provides for following
information with respect to the identification of related parties.
The most commonly encountered related parties of a reporting
enterprise include the following:
• an enterprise that directly or indirectly,
through one or more intermediaries, controls, or is controlled
by, or is under common control with, the reporting enterprise;
• an individual who directly, or indirectly through
one or more intermediaries, controls the reporting enterprise;
• the other party, when an investment is accounted
for by the equity or the proportionate consolidation method
and the reporting enterprise is either the investor or the
investee;
• management: any person(s) having authority
and responsibility for planning, directing and controlling
the activities of the reporting enterprise (In the case of
a company, management would include the directors, officers
and other persons fulfilling a senior management function.
When an independent committee of the board of directors is
established in accordance with regulatory requirements, to
represent the non-controlling interests of an enterprise, the
directors serving on that committee are deemed not to be related
parties for the transaction under consideration.);
• an individual having an ownership interest
in the reporting enterprise that results in significant influence
or joint control;
• members of the immediate family of individuals
described in paragraphs (b), (d) and (e) (Immediate family
comprises an individual's spouse and those dependent on either
the individual or the individual's spouse.);
• the other party, when a management contract
or other management authority exists and the reporting enterprise
is either the managing or managed party;
• any party that is subject to significant influence,
whether by reason of an ownership interest, management contract
or other management authority, by another party that also has
significant influence over the reporting enterprise; and
• any part that is subject to joint control by
the reporting enterprise (In this instance a party subject
to joint control is related to each of the venturers that share
that joint control. However, the venturers themselves are not
related to one another solely by virtue of sharing of joint
control.).
Date Modified: 2006-01-16 |
