Related Party Issues

Question 1

Related Party

Answer 1

one party is able to influence the other

a party defined as a related party in the applicable financial reporting framework

Question 2

arms length transactions

Answer 2

a transaction conducted on such terms and conditions between a willing buyer and a willing seller who are unrelated and are acting independently of each other and pursuing their own best interests.

Question 3

procedures used to identify related parties

Answer 3

inquire of management
review prior years audit documentation
review sec filings (for public companies)
review stockholder listings (for private companies)

Question 4

identify transactions with related parties

Answer 4

inquire mangement
review minutes of board meetings of those charged with governance
inspect documents related to large unusual transactions (review debt agreements)

Question 5

need to ______ to those charged with governance any significant matters associated with the entities related parties

Answer 5

Communicate

Question 6

______ should include the name of any identified related parties and the nature of the related party relationship and transactions

Answer 6

Documentation