Auditing Related-Party Transactions
Audit Procedures for Related Parties
Auditors identify related-party transactions, evaluate whether they were properly authorized, determine whether they were accounted for appropriately, and verify that required disclosures are complete.
- Review board meeting minutes.
- Inspect conflict-of-interest statements.
- Examine significant unusual transactions.
- Ask management and those charged with governance about related parties.
- Review financial statement disclosures.
Tip
Unusual transactions occurring near year-end often deserve additional scrutiny for possible related-party involvement.
Summary
Auditors focus on identifying undisclosed relationships and ensuring transparent reporting of related-party transactions.