Related parties
Financial Dictionary — Auditing & Governance
Definition
Individuals or entities with relationships that may influence transactions.
Detailed Explanation
Related parties are individuals or entities with a relationship that can influence transactions or decisions, requiring disclosure under applicable standards.
Common Uses
- Used in audit planning to understand risks and design procedures.
- Used during testing (controls/substantive) and documentation of audit evidence and conclusions.
- Used during testing (controls/substantive) and documentation of audit evidence and conclusions.
Practical Example
- Example: The auditor references **Related parties** when designing procedures and documenting conclusions in the audit file.
Why This Term Matters
- Why it matters: Supports high-quality, defensible audit conclusions and helps detect material misstatements and control weaknesses.