Draft Related Party Disclosure Policy

Record No: 18/29963

Adopted: TBA

ResponsibleDepartment

DatetobeReviewed August2028

1. Purpose

TheRelatedPartyDisclosurePolicyaimstoassistCouncilincomplyingwithdisclosurerequirementsconcerningkey management personnel (includes Councillors), their close family members and entities controlled or jointly controlledbyanyofthemstipulatedundertheAustralianAccountingStandardAASB124RelatedPartyDisclosures andtheAustralianimplementationguidancefornot-for-profitpublicsectorentities(AASB124).

2. Background

AustralianAccountingStandardAASB124RelatedPartyDisclosures(AASB124)requires not-for-profitpublicsector entities.todiscloserelatedpartytransactionsandoutstandingbalancesintheirannualfinancialstatements,inthe samewayasfor-profitpublicsectorandprivatesectorentities.

ThismeansthatCouncilwillneedtodisclose,intheirannualfinancialstatements,‘material’transactionsand balancesoutstandingwith:

 KeyManagementPersonnel(KMP)–includesCouncillors

 ClosefamilymembersofKMP,and

 Entitiescontrolled/jointlycontrolledbyKMPortheirclosefamilymembers

3. Scope

ThispolicyrelatesonlytorelationshipswithpersonsandentitiesidentifiedasRelatedPartiesunderthedefinitions provided within this policy. Council will use its judgement in determining when such a relationship exists and whethertheinformationprovidedrequiresdisclosure

4. Definitions

AASB124 -theAustralianAccountingStandardsBoard,RelatedPartyDisclosuresStandard.

Act -theLocalGovernmentAct1993.

Close members of the family of a person are - those family members who may be expected to influence, or be influencedby,thatpersonintheirdealingswiththeCouncilandinclude:

a)Thatperson’schildrenandspouseordomesticpartner;

b)Childrenofthatperson’sspouseordomesticpartner;and

c)Dependantsofthatpersonorthatperson’sspouseordomesticpartner.

ForthepurposesofAASB124,closefamilymembersmayincludeextendedmembersofthefamily(suchas,without limitation, parents, siblings, grandparents, uncles, aunts or cousins) if they could be expected to influence, or be influenced,bytheKMPintheirdealingswithCouncil.

Council -FederationCouncil.

Entity - may include companies, trusts, joint ventures, partnerships, incorporated association or unincorporated grouporbodyandnon-profitassociationssuchassportingclubs

FederationCouncil-RelatedPartyDisclosurePolicy

Reference:18/29963

Key ManagementPersonnel (KMP) -thosepersons having authorityandresponsibility forplanning, directing and controllingtheactivitiesoftheentity,directlyorindirectly,includinganydirector(whetherexecutiveorotherwise) ofthatentity.IthasbeendeterminedthattheKMPforCouncilwillcomprise:

 Councillors;

 GeneralManager;

 Directors;and

 ActingKMPs

o IndividualsthatarerequiredtotemporarilyactinKMProlemaybesubjecttothedisclosure requirementswhen:

 Theappointmentisforthreeormoremonthsinthe financialyear;or

 Iflessthan3months,basedontheassessmentmadebyChiefFinancialOfficeronthe person’sparticipationinkeydecisionmadeintheperiod.

o Where anindividualhasbeenassessedtobeaKMP,theywillberequiredtofollowthesame processasapermanentKMPwould.

KMP Compensation - includes all forms of consideration paid, payable, or provided by Council in exchange for servicesrenderedtoCouncil.Compensationmayinclude:

a) Short-term employee benefits, such as wages, salaries and social security contributions, paid annual leave and paid sick leave, profit sharing and bonuses (if payable within twelve months of the end of the period) and non-monetary benefits (such as medical care, housing, cars and free and subsidised goods or services)forcurrentemployees;

b)Post-employmentbenefitssuchaspensions,otherretirementbenefits,postemploymentlifeinsurance andpost-employmentmedicalcare;

c) Other long-term employee benefits, including long-service leave or sabbatical leave, jubilee or other long-servicebenefits,long-termdisabilitybenefitsand,iftheyarenotpayablewhollywithintwelvemonths aftertheendoftheperiod,profitsharing,bonusesanddeferredcompensation;and

d)Terminationbenefits.

Material (materiality) - the assessment of whether the transaction, either individually or in aggregate with other transactions, by omitting it or mis-stating it could influence decisions that users make on the basis an entity's financialstatements.Forthepurposeofthispolicy,itisnotconsideredappropriatetoseteitheradollarvalueora percentagevaluetodeterminemateriality.

Ordinary Citizen Transaction - a transaction that an ordinary citizen of the community would undertake in the ordinarycourseofbusinesswithCouncil.

RelatedParty -forthepurposesofthispolicy,relatedpartiesofCouncilare:

 EntitiesrelatedtoCouncil;

 KeyManagementPersonnel(KMP)ofCouncil;

 ClosefamilymembersofKMP;

 PossibleclosefamilymembersofKMP's;and

 EntitiesorpersonsthatarecontrolledorjointlycontrolledbyKMP,ortheirclosefamilymembers,or theirpossibleclosefamilymembers.

AlsoapersonorentityisarelatedpartyofCouncilifanyofthefollowingapply:

 Theyaremembersofthesamegroup(whichmeansthateachparent,subsidiaryandfellowsubsidiaryis relatedtotheothers);

 TheyareanassociateorbelongtoajointventureofwhichCouncilispartof;

FederationCouncil-RelatedPartyDisclosurePolicy

Reference:18/29963

 TheyandCouncilarejointventuresofthesame thirdparty;

 Theyarepartofajointventureofathirdpartyandcouncilisanassociateofthethirdparty;

 Theyareapost-employmentbenefitplanforthebenefitofemployeesofeitherCounciloranentity relatedtoCouncil;

 TheyarecontrolledorjointlycontrolledbyClosemembersofthefamilyofaperson;

 Theyareidentifiedasacloseorpossiblyclosememberofthefamilyofapersonwithsignificantinfluence overCounciloracloseorpossiblyclosememberofthefamilyofapersonwhoisaKMPofCouncil;or

 TheyoranymemberofagroupofwhichTheyareapart,provideKMPservicestoCouncil.

RelatedPartyTransaction - is atransferof resources,servicesorobligations betweenCouncilandarelatedparty, regardlessofwhetherapriceischarged.

Significant (significance) - likely to influence the decisions that users of the Council’s financial statements make havingregardtoboththeextent(valueandfrequency)ofthetransactions,andthatthetransactionshaveoccurred betweentheCouncilandrelatedpartyoutsideapublicserviceprovider/taxpayerrelationship.

5. References & Associated Documents

5.1 Relevant legislation

 LocalGovernmentAct1993 andRegulation

 AccountingStandardAASB124RelatedPartyDisclosures

 PrivacyandPersonalInformationProtectionAct1998

 PrivacyandPersonalInformationProtectionRegulation2019

 GovernmentInformation(PublicAccess)Act2009

5.2 Relevant Council Policies

 CodeofConduct

 ProcurementPolicy

6. Policy

The Australian Accounting Standards Board (AASB) determined in AASB 124 that from 1 July 2016 related party disclosureswillapplytogovernmententities,includinglocalgovernments(Councils).

6.1 Disclosure

AASB124providesthatCouncilmustdisclosethefollowingfinancialinformationinitsfinancialstatementsforeach financialyearperiod:

 disclosureofanyrelatedpartyrelationship;

o mustdiscloseinitsAnnualFinancialStatementsitsrelationshipwithanyrelatedpartiesor subsidiaries(whereapplicable),whetherornottherehavebeentransactionswithintherelevant reportingperiod;

 KeyManagementPersonnel(KMP)compensationdisclosures;

o mustdiscloseinitsAnnualFinancialStatementsdetailsforeachofthecategoriesofKMP compensation,asstatedinthedefinitionsofthisPolicy,intotal.

FederationCouncil-RelatedPartyDisclosurePolicy

Reference:18/29963

Council is committed to responsible corporate governance, including compliance with laws and regulations governingrelatedpartytransactions.

6.2 Identification and transaction

RelatedPartyrelationshipsareanormalfeatureofcommerceandbusiness.Forexample,entitiesfrequentlycarry on parts of their activities through subsidiaries, joint ventures and associates. In those circumstances, there is the possibility of the entity having the ability to affect the financial and operating policies of Council through the presenceofcontrol,jointcontrolorsignificantinfluence.

A Related Party relationship could influence the normal business operations of Council even if Related Party Transactions do not occur. The mere existence of the relationship may be sufficient to affect the transactions of the Council with other parties. Alternatively, one party may refrain from trading with Council because of the significant influence of another—for example, a local supplier may be instructed by its parent not to engage in supplyinggoodstoCouncil.

For these reasons, knowledge of Council’s transactions and outstanding balances (including commitments and relationshipswithRelatedParties)mayaffectassessmentsofCouncil'soperations.

AASB 124 provides that Council must disclose all material and significant Related Party Transactions and outstandingbalances;includingcommitments,initsAnnualFinancialStatements.Generally,disclosurewillonlybe madewhereatransactionhasoccurredbetweencouncilandarelatedpartyofcouncil.Inaddition.thetransaction mustbematerialinnatureorsize,whenconsideredindividuallyorcollectively.

Whenassessingwhethersuchtransactionsaresignificantthefollowingfactorswillbetakenintoconsideration:

Significanceintermsofsize;

 Wasitcarriedoutonnon-marketterms;

 Isitoutsidenormalday-to-daycounciloperations;

 Wasitsubjecttocouncilapproval;

 Diditprovideafinancialbenefitnotavailabletothegeneralpublic;

 Wasthetransactionlikelytoinfluencedecisionsofusersoftheannualfinancialstatements.

Regardmustalso begivenfortransactionsthatarecollectively,butnotindividuallysignificant.

ToenableCounciltocomplywithAASB124Council’sKMParerequiredtodeclarefulldetailsofanyRelatedParties and Related Party Transactions. Such information will be retained and reported, where necessary, in Council’s AnnualFinancialStatements.

All transactions involving Related Parties will be captured and reviewed to determine materiality or otherwise of such transactions, if the transactions are Ordinary Citizen Transactions, and to determine the significance of each ofthetransactions.

The method for identifying the close family members and associated entities of KMP will be by KMP selfassessment. KMP have an ongoing responsibility to advise Council immediately of any Related Party Transactions andanychangetotheircircumstancewhichmayrequiredisclosureoraltertheirpreviousdisclosuretoCouncil.

6.2.1 Other Sources of Information

Toensureallrelatedpartyinformationiscaptured,CouncilmayreviewothersourcesofinformationheldbyCouncil including,butnotlimitedto:

 MinutesofCouncilandcommitteemeetings

 Council’scontractsregister

Reference:18/29963

6.3

 Council’sfinancialsystemsandothersystems

Reporting

The preferred method of reporting details of Related Parties and Related Party Transactions, is by completing the RelatedPartyDisclosuresDataCollectionForm,anddeliveringittotheGeneralManager.

KMPsmustcompletetheRelatedPartyDisclosuresDataCollectionForm,notifyinganyexistingorpotentialRelated Party Relationships between Council and any related parties of the KMP, by no later than the following periods duringafinancialyear:

 30 daysafterthecommencementoftheapplicationofthispolicy

 30 daysafteraKMPcommencestheirtermoremploymentwithCouncil

 One(1)monthaftertheendofeachfinancialyear

During the financial year, a KMP must proactively notify of any new or potential Related Party Relationships that thepersonknowsof,oranychangestopreviouslynotifiedRelatedPartyRelationshipstothe GeneralManagerby no laterthan30daysafterthepersonknowsofthetransactionorchange.

Should a KMP have any uncertainty as to whether a transaction may constitute a related party transaction they shouldcontacttheGeneralManager.

Information provided will be reviewed in accordance with the Council’s operational requirements and held on Council’sElectronicDataManagementSystem.

6.4 Confidentiality

Collection, storage, use and disclosure of information collected from Related Parties is governed by the Privacy & PersonalInformationProtectionAct1998andtheassociatedRegulations.GovernmentInformation(PublicAccess) Act2009.InformationprovidedbyKMP andotherrelatedpartiesshallbeheldforthepurposeofcompliancewith Council’slegalobligationandshallbedisclosedwhererequiredforcomplianceorlegalreasonsonly.

6.4.1

Permitted Recipients

The following persons are permitted to access, use and disclose the information (including personal information) provided in a related party disclosure or contained in a register of related party transactions for the purpose specifiedinthepermittedpurposessectionfollowing:

 GeneralManager;

 DeputyGeneralManagerandChiefFinancialOfficer;

 ManagerFinance

 Council’sauditors(includingauditorsfromtheNSWAuditorGeneral’sOffice);and

 OtherOfficersasdelegatedbytheGeneralManager

6.4.2

Permitted Purposes

ApersonspecifiedinthePermittedRecipientssectionmayaccess,useanddiscloseinformation(includingpersonal information) in related party disclosure or contained in a register of related party transactions for the following purposes:

 To accessandverifyanotifiedrelatedpartytransaction

 To reconcileidentifiedrelatedpartytransactionagainstthosenotifiedinrelatedpartydisclosureor containedinaregisterofrelatedpartytransactions

Reference:18/29963

 To complywiththedisclosurerequirementsofAASB124

 Toverifycompliancewiththe disclosurerequirementsofAASB124

ThispolicywillbeprovidedtoKMPintheinitialawarenessraisinganddatacollectionandaspartofKMPinductions includingCouncillorinductions.

Internaltrainingonsupportingthispolicyshallbescheduledasrequired.

7. Policy History

Version Date Changes/Amendments

V1.0 17 April2018 Adopted(seeformatCM18/29964)

V2.0 12 August2024

 DefinewhenActingKMPswillbesubjecttodisclosurerequirement

 Added‘OtherSourceofInformation’toensureallinformationare captured

 Reinforceconfidentialitybyintroducing‘PermittedRecipients’and ‘PermittedPurposes’

 Extendreviewperiodfrom2 to4 years

8. Reviews

The Related Parties Disclosure Policy will be reviewed every 4 years and as required in the event of legislative change.Thispolicymayalsobereviewedwhenanyofthefollowingoccur:

 AchangeofCouncillors,GeneralManagerorotherKMP;

 Achangeofcorporaterestructure;

 Therelatedlegislation/documentsareamendedorreplaced;

 OthercircumstancesasdeterminedfromtimetotimebyaresolutionofCouncil;and

 AsaresultofchangestotheOLGLocalGovernmentCodeofAccountingPracticeandFinancialReporting.

NOTE: This is a controlled document. If you are reading a printed copy please check that you have the latest versionbycheckingitonCouncilsElectronicDocumentsystem.Printedordownloadedversionsofthisdocument areuncontrolled

FederationCouncil-RelatedPartyDisclosurePolicy

Reference:18/29963