Key Managerial Personnel (KMP) as per Accounting Standard (AS) 18

[megri]

No, a non-executive director is not necessarily considered a Key Managerial Personnel (KMP) as per Accounting Standard (AS) 18 because AS 18 focuses on the individual's authority and responsibility in managing the company, not their specific title.

KMPs are defined as personnel who have the authority and responsibility for planning, directing and controlling the activities of the company [1]. This typically applies to roles like Chief Executive Officer, Chief Financial Officer, Company Secretary, and Whole-time Directors.

Non-executive directors, although board members, generally have a less hands-on role in day-to-day operations. However, there can be exceptions. If a non-executive director is heavily involved in running the company, they could be considered a KMP under AS 18.

Here's a helpful point to remember: The Companies Act 2013 mandates certain positions to be included as KMPs, but AS 18 takes a more functional approach based on the person's responsibilities.

[megri]

However, there can be exceptions. If a non-executive director has a significant role in planning, directing, and controlling the company's activities, they could be considered KMP under AS 18. This would depend on the specific circumstances of the company and the individual's involvement.

[megri]

Accounting Standard (AS) 18 doesn't provide an exhaustive list of KMP titles. Instead, it focuses on the individual's role and responsibilities within the company.

Here are some examples of typical KMP positions:

• Managing Director
• Chief Executive Officer (CEO)
• Chief Financial Officer (CFO)
• Chief Operating Officer (COO)
• Whole-time Directors

These individuals are typically responsible for the overall management of the company and have the authority to make significant decisions.

Note: Non-executive directors are generally not considered KMP under AS 18.

[SwatiSood]

According to Accounting Standard (AS) 18 on Related Party Disclosures issued by the Institute of Chartered Accountants of India (ICAI), Key Managerial Personnel (KMP) are defined as follows:

Key Managerial Personnel are those persons who have the authority and responsibility for planning, directing, and controlling the activities of the reporting enterprise. This includes:

1. Directors (executive or non-executive)
2. Chief Executive Officer (CEO)
3. Chief Financial Officer (CFO)
4. Company Secretary
5. Any other person who performs such key functions and is part of the senior management team

The standard requires that enterprises disclose the details of transactions with Key Managerial Personnel and their relatives. This includes transactions such as:

• Remuneration (salary, bonus, commission, etc.)
• Loans and advances
• Deposits
• Guarantees given or received
• Management contracts
• Any other transactions with KMP or their relatives

The disclosure requirements under AS 18 are intended to provide transparency and help users of financial statements understand the potential effects of related party relationships on the enterprise's financial position and performance.

It's important to note that the definition and disclosure requirements for Key Managerial Personnel may vary across different accounting standards or jurisdictions, but AS 18 provides the specific guidance for entities following Indian Accounting Standards.

[neharani]

Accounting Standard (AS) 18, "Related Party Disclosures," issued by the Institute of Chartered Accountants of India (ICAI), primarily focuses on the disclosure requirements related to transactions with related parties. However, it doesn't specifically define Key Managerial Personnel (KMP).

In the context of Indian corporate governance and accounting practices, KMP typically refers to individuals who hold key positions within a company and have significant authority and responsibility for the company's operations and decision-making process. While AS 18 doesn't explicitly define KMP, these individuals usually include:

1. Managing Director (MD): The top executive responsible for the day-to-day operations of the company.
2. Chief Executive Officer (CEO): The highest-ranking executive responsible for making major corporate decisions, managing the overall operations, and resources of a company.
3. Chief Financial Officer (CFO): The senior executive responsible for managing the financial actions of the company, including financial planning, management of financial risks, record-keeping, and financial reporting.
4. Company Secretary (CS): The individual responsible for ensuring that the company complies with regulatory and statutory requirements and for maintaining the records of the company.
5. Whole-time Director (WTD): A director who is in the whole-time employment of the company and is entitled to receive remuneration.
6. Any other executive designated as a key managerial person by the Board of Directors.

Under AS 18, companies are required to disclose transactions with related parties, including transactions involving KMP, their relatives, and enterprises controlled by them. This disclosure aims to provide transparency regarding potential conflicts of interest and ensure that such transactions are conducted at arm's length.

[harsh]

As per Accounting Standard (AS) 18, "Related Party Disclosures," Key Managerial Personnel (KMP) are individuals who have the authority and responsibility for planning, directing, and controlling the activities of the reporting enterprise. This includes directors (executive or otherwise) and senior executives who report directly to the board of directors. The identification of KMP is crucial for accurate and comprehensive related party disclosures.

Key Elements of AS 18 Related to KMP

1. Definition of KMP:
   • Individuals with authority and responsibility for planning, directing, and controlling the activities of the entity.
   • Typically includes directors, chief executives, chief financial officers, and other senior executives.
2. Disclosure Requirements:
   • Nature of the relationship with KMP.
   • Types of transactions with KMP, such as remuneration, loans, and other benefits.
   • Amount of transactions and outstanding balances with KMP.
3. Examples of KMP:
   • Executive directors (e.g., Managing Director, CEO).
   • Non-executive directors (if they have significant control or influence).
   • Senior management (e.g., CFO, COO).
   • Other individuals with significant control or influence over the company’s operations.

Categories of Disclosures Under AS 18

1. Remuneration and Benefits:
   • Salaries and wages.
   • Bonus payments.
   • Pension and post-employment benefits.
   • Share-based payments.
   • Other benefits such as housing, car allowance, etc.
2. Transactions with KMP:
   • Loans given or received.
   • Purchases or sales of goods or services.
   • Lease agreements.
   • Guarantees and commitments.
   • Use of assets.
3. Outstanding Balances:
   • Receivables and payables at the end of the reporting period.
   • Terms and conditions of outstanding balances.
   • Provisions for doubtful debts related to amounts owed by KMP.

Key Points for Effective Disclosure

• Transparency: Disclosures should be transparent, providing a clear view of the financial relationship between the company and its KMP.
• Materiality: Only significant transactions and balances need to be disclosed. Insignificant transactions may be omitted.
• Consistency: Disclosures should be consistent from period to period, ensuring comparability.

Importance of KMP Disclosure

• Enhanced Understanding: Helps stakeholders understand the extent of control and influence exercised by KMP.
• Conflict of Interest: Identifies potential conflicts of interest and ensures they are managed appropriately.
• Regulatory Compliance: Ensures compliance with accounting standards and regulations, thereby avoiding penalties and maintaining investor confidence.

By adhering to the requirements of AS 18 regarding KMP, companies ensure they provide a true and fair view of their financial position and performance, reflecting the impact of relationships and transactions with key managerial personnel.

[Daljeet]

As per Accounting Standard (AS) 18, "Related Party Disclosures," issued by the Institute of Chartered Accountants of India (ICAI), Key Managerial Personnel (KMP) are defined as those persons who have the authority and responsibility for planning, directing, and controlling the activities of the reporting enterprise. This includes any director (whether executive or otherwise) of the enterprise. Key Aspects of KMP under AS 18

1. Authority and Responsibility:
   • KMPs have significant authority and responsibility for planning, directing, and controlling the activities of the company. This typically includes top executives such as the CEO, CFO, COO, and other high-ranking officers.
2. Directors:
   • All directors of the company, whether they are executive or non-executive directors, are considered KMPs. This includes managing directors and whole-time directors.

Disclosure Requirements


AS 18 requires disclosure of related party relationships and transactions. Specifically, in relation to KMP, the following should be disclosed:

1. Names of KMP:
   • The names of the key managerial personnel within the organization.
2. Relationships:
   • The nature of the relationship between the company and the KMP.
3. Transactions:
   • Details of transactions with KMP, including compensation, benefits, and any other transactions.
   • Transactions include those that are significant or material, impacting the financial statements or the decision-making of users of the financial statements.
4. Amounts:
   • The amount involved in transactions with KMPs, including salary, bonuses, stock options, and any other benefits.