22AU-C 550 Related Parties


AU-C 550 applies to all audits of financial statements and requires that auditors evaluate related parties and relationships and transactions and their effect on risks of material misstatements. This Section also requires that the auditor evaluate whether related-party disclosures beyond those required by the specialized framework are necessary. (AU-C 550.01 and .02)


Source: AU-C 550.10. For definitions related to this standard, see Appendix A, “Definitions of Terms”: Arm's-length transaction, Related party.


The objectives of the auditor are to

  1. obtain an understanding of related-party relationships and transactions sufficient to be able to
    1. recognize fraud risk factors, if any, arising from related-party relationships and transactions that are relevant to the identification and assessment of the risks of material misstatement due to fraud.
    2. conclude, based on the audit evidence obtained, whether the financial statements, insofar as they are affected by those relationships and transactions, achieve fair presentation.
  2. obtain sufficient appropriate audit evidence about whether related-party relationships and transactions have been appropriately identified, accounted for, and disclosed in the financial statements ...

Get Wiley Practitioner's Guide to GAAS 2023, 2nd Edition now with the O’Reilly learning platform.

O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.