PART ARelated party transactions (RPTs) are transfers of resources, services or obligations between an entity and related parties: members of the same group, associates or joint ventures ( CNAC 124, paragraph 9). RPTs are the synergies within different parts of the conglomerate and thus lead to healthy cost efficiency and profit maximization of the group. For parent companies, RPTs help them improve risk management and effective control of subsidiaries (Basel, 1999). RPTs can be carried out on the basis of the relationship between the parties through the presence of control, joint control or significant influence (CNAC 124, paragraph 5). . Within the Commonwealth Bank Group (the Group); The Bank, the parent entity, has the power to direct the financial and operational policies of its controlled entities, therefore the ability to transfer assets within subsidiaries. The Group's RPTs take the form of management services provided to associated companies of the Group and the Bank, loans, deposits and foreign currency transactions or tax financing and sharing agreements with subsidiaries (Commonwealth 2010 p.218&219 ). Examples of RPTs are available in note 45 of the Group's financial statements. There were transfers of derivative assets from subsidiaries to the Bank, amounting to $188,010,000 in 2009 and $193,959,000 in 2010 (Commonwealth 2010 p. 220), including derivatives held for trading, hedging and other derivatives (Commonwealth 2010 p. 135). Thanks to these transactions, the Group is better protected against fluctuations in interest rates and exchange rates. RPTs also reduce the risk of future cash flow volatility, minimize exposures to currency translation risk in overseas operations, and increase the diversity of financial instruments to meet customer needs (...... middle of paper ..... .and its subsidiaries.REFERENCES1 Arthur, N., R. Grose, J. Cambell and L. Luff, (2008), Accounting for Corporate Combinations and Associations, 6th edition, Pearson Education Australia24 (2009 ) 'Related Party Disclosure', Australian Accounting Standards Board, Australia.3 AASB 127 (2009) 'Consolidated and Separate Financial States', Australian Accounting Standards Board, Australia.4 Basel (1999) Principles of intra-trades and exposures. group, The Joint Forum: Banking Supervision Committee, International Organization of Securities Commissions, International Insurance Supervision Association, Basel Committee Publications.5 Commonwealth Bank Limited (2010), “Annual Report 2010”, available at: http:// www.commbank.aom.au/. about-us/shareholders/pdfs/annual-reports/Commonwealth_Bank_2010_Annual_Report.pdf [accessed August 17 2011]