Related parties

In this lesson

1. 0:00 Related parties and audit evidence
2. 0:45 Types of related party relationships
3. 2:33 Arm's length transactions and IAS 24
4. 4:06 Why related party completeness is a significant risk
5. 6:30 Related party procedures across all audit stages
6. 7:44 Specific testing procedures for related parties
7. 9:22 Trust and Co loan case study walkthrough
8. 11:22 Qualified opinion when disclosure is refused

About this lesson

Related parties include anyone with control or significant influence over your client—such as parent companies, directors, key management, and their close families—and the challenge lies in ensuring these relationships and transactions are properly disclosed in the financial statements under IAS 24. You'll explore why related party transactions are inherently material and pose a completeness risk. Because related parties often conduct business on non-arm's length terms, management may conceal them, accounting systems may fail to capture them, and they're frequently non-routine in nature. The lesson walks you through specific audit procedures to identify related parties, including reviewing previous working papers, examining shareholder and director records, and scrutinising unusual transactions that lack clear business purpose. The lesson concludes with a practical worked example: auditing a loan to a key management individual that management failed to disclose. You'll learn how to evaluate whether the omission is intentional, assess the control deficiency, communicate findings to those charged with governance, and determine the appropriate audit opinion. Since related party transactions are material by nature regardless of monetary value, failure to disclose results in a qualified opinion on the grounds of inadequate disclosure.

Duration: 13m