[jc1103]

NINJA Question –

Hello!

I have a question about a research question I came across in Ninja

During the year-end audit of Client Mfg., the lead auditor in charge of the audit asks you to provide guidance for the treatment of material transactions with related parties. What section and paragraph of the AICPA’s Codification of Statements on Auditing Standards (clarified standards) provide examples of procedures to recognize material transactions with related parties?

The answer, which is AU-C 550.A2, is not making sense to me at all :/. I’ve tried looking elsewhere for an explanation but no luck. Would really appreciate any help I can get with this question. Thank you!

Answer: AU-C 550.A2 states, “Established accounting principles ordinarily do not require transactions with related parties to be accounted for on a basis different from that which would be appropriate if the parties were not related.”