How to determine who are Key Management Personnel
Definition of Key Management Personnel (KMP)
KMP has the same meaning as defined in AASB 124 Related Party Disclosures. (AASB 124) and AASB 1060 General Purpose Financial Statements – Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities (AASB 1060). KMP are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity. Commonwealth entities in preparing their annual financial statements would have decided which persons meet the definition of KMP.
Consistent with this definition, the Accountable Authority of entities, including Secretaries of Departments of State, Chief Executives of non-corporate Commonwealth entities, and non-executive Board members are considered to be KMP.
Common examples of other KMP determined by Commonwealth entities in preparing their financial statements in accordance with AASB 124 may include, but is not limited to, the following:
Non-corporate Commonwealth entities
Corporate Commonwealth entities
There should be consistency in the reporting of KMP remuneration between the financial statements and the information reported in the body of the annual report.
The following questions may assist entities to determine the people to be reported as KMP:
- Is the person the Accountable Authority or a member of the governing Board of the entity?
- Is the person a member of the entity's Executive Management Board?
- Does the Executive Management Board have decision-making authority?
- Does the person have the delegation and/or the authority to make decisions relating to planning, directing and controlling the activities of the entity? If yes, do these delegations and/or authority cover significant aspects of the entity's operations?
- Is the person included in the aggregate reporting of KMP in the entity's financial statements?
If an entity answers ‘Yes’ to all or most of these questions, it supports the inclusion of the relevant person as a KMP for the purposes of executive remuneration reporting in the entity’s annual report. In particular, it is expected that the Accountable Authority and each member of the governing board would be reported as KMP.
Refer to Employment arrangements to include in disclosure tables for further detail on how to determine individuals to include in the executive remuneration reporting.
What to report under KMP executive remuneration
KMP executive remuneration information must be reported in accordance with the KMP table in Schedule 3 of the Public Governance, Performance and Accountability Rule 2014 (PGPA Rule).
For each of the key management personnel of the entity, the following information must be included:
- Name
- Position title
- Base salary
- Bonuses
- Other benefits and allowances
- Superannuation contributions (made by the entity)
- Long service leave
- Other long-term benefits
- Termination benefits
- Total remuneration.
Please refer to How to calculate & report for further details on this and general requirements on each remuneration category.
Reported KMP remuneration to be consistent with financial statements
Under AASB 124, reporting entities are already required to disclose in the notes to the financial statements total remuneration of the KMP at the aggregate level, including how it is split between the following 4 major categories:
short-term employee benefits,
post-employment benefits,
other long-term employee benefits, and
termination benefits.
The key difference between what is reported in the notes to the financial statements, and what is required under the PGPA Rule for KMP is the level of detail. The financial statement disclosure is on an aggregated basis, whereas the annual report disclosure is required to be on an individual basis. Additional information that must be included in the table includes the:
- Full name of each KMP, and
- Position of each KMP, for example, Accountable Authority or Chief Executive Officer.
The total KMP remuneration disclosed in accordance with the PGPA Rule should match the total KMP remuneration disclosed in the notes to the financial statements.
