Objective
To obtain sufficient appropriate evidence about the identification, accounting and disclosure of related-party relationships, transactions and balances; and identification of fraud risk involving related parties.
Key requirements
- Procedures to identify undisclosed related parties and significant related-party transactions outside the normal course of business
- Procedures to obtain evidence on arm's-length nature where management asserts it
- Specific consideration of fraud risk arising from related-party transactions
- Disclosure compliance with Ind AS 24 / AS 18 and Section 188 of the Companies Act
Typical procedures
- Inquiry of management and TCWG on related parties
- Inspection of board minutes, contracts, statutory registers
- Sample testing of related-party transactions for completeness and pricing
- Cross-check with CARO clause (iii) and (xiii)
Common pitfalls
- Reliance on management's related-party list without independent corroboration
- No assessment of arm's-length pricing for material RPTs
- Missing Section 188 board / shareholder approval verification
On CORAA
Working-paper template covering Ind AS 24 / AS 18 disclosure, Section 188 approvals, CARO clause (xiii).
Open the matching module →SA 550 in practice
SA 550 sits in the Audit Evidence phase of the audit. The Standards on Auditing are issued by the ICAI Auditing and Assurance Standards Board (AASB) and deemed to be prescribed by the Central Government under Section 143(10) of the Companies Act 2013. Compliance with SAs is mandatory for every audit conducted by a Chartered Accountant in India.
For authoritative text, refer to the ICAI AASB Compendium of Standards on Auditing at icai.org.
