What it is
A related party workpaper has to answer three questions: who are the related parties, what happened with them, and what is owed at year end. This workbook keeps those as linked lists, so a transaction can only be attributed to a party on the register and each party’s activity and balances roll up automatically.
Flags mark a transaction with a party missing from the register, an arm’s-length statement without objective evidence, a transaction outside the normal course of business that was not approved, and a transaction with no written agreement. A summary ties the schedule to the ledger and totals the activity by nature for the ASC 850 note.
When to use it
- During planning and completion of any audit, to document identification and testing of related parties.
- When preparing the related party note and checking its amounts to the ledger.
- When officers, owners or affiliates lend, lease, buy or sell with the entity.
What’s inside
- Parties register: relationship, control, how identified, questionnaire date and roll-up of activity and balances
- Transactions: 60 lines with nature, GL account, approval, agreement and arm’s-length evidence flags
- Balances: due from and due to by party with terms and confirmation difference
- Summary: tie-out to the ledger, exception counts and amounts by nature
Standard cited
This template follows AU-C 550 / ASC 850. It is written in our own words, except for phrases the standard requires the document to contain, with [bracketed placeholders] for client details, amounts in USD and dates as MM/DD/YYYY. Check it against the current standard and your firm’s methodology before use. See AU-C 550 explained.
Questions
What does ASC 850 require in the note?
The nature of the relationship, a description of the transactions including those for which no amounts were recorded, the dollar amounts of transactions for each period an income statement is presented, and the amounts due to or from related parties with the terms and manner of settlement. Control relationships are disclosed even if there were no transactions.
Can the note say transactions were at arm’s length?
Only if the entity can substantiate that. A representation that terms were equivalent to an arm’s-length transaction should not be made unless it can be supported, and the auditor evaluates the support. The worksheet flags a stated claim without objective evidence.
How does the auditor find related parties the entity did not list?
AU-C 550 asks for inquiries of management and for staying alert, throughout the audit, to related party information in documents such as minutes, confirmations, tax returns, loan agreements and the ledger. The Parties tab records how each party was identified.
What if the schedule does not tie to the ledger?
Resolve the difference before relying on it. Common causes are a related party account that is not on the schedule, a transaction posted to a general expense account, or a period cutoff difference. The Summary tab shows each difference.
Related templates
- Related Party Questionnaire for Management (AU-C 550 / ASC 850)
- Disclosure Checklist: Related Parties (ASC 850)
- Audit Planning Memo (AU-C 300)
- Management Representation Letter (AU-C 580)
Last updated 11/05/2026. All free templates.