Back to all posts

Related Party Transactions

We often receive queries about related party transactions and what should be included on an accounts preparation or audit file. Completing the following steps will ensure that your file contains everything that is needed and give comfort over disclosures within the financial statements:

  • Ensure that the file documents a full list of known related parties as per the definition within the GAAP being used to prepare the financial statements.
  • Review your client’s accounting records for transactions and balances that have been entered into with those related parties and prepare a schedule of the same.
  • Consider the disclosure requirements of the GAAP being followed (full FRS 102 / s.1A / IFRS) and document on your working paper which transactions require disclosure within the accounts and any exemptions that can be taken.
  • Prepare / review the disclosures within the notes to the financial statements and amend or update as necessary.
  • If you are auditing, ensure that in addition to the above, you obtain necessary confirmations and other relevant audit evidence.