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URUSNIAGA ANTARA PIHAK BERKAITAN

IAS 24/MASB 8

K3

ISA 550

DEFINATION OF RELATED PARTY Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party, to the extent that it prevents the other party from fully pursuing its own separate interest, in making financial and operating decisions.

EXAMPLES OF RELATED PARTIES


Jointly controlled organization Majority ownerships or power to vote Key management personal in any entity Subsidiary, associated or parent companies Other parties with the power to interfere the management from taking actions.

DEFINISI
RELATED PARTY TRANSACTIONS: A transfer of resources or obligations between related parties, regardless of whether a price is charged.

ISA 550 on
RELATED PARTIES
Auditor should perform audit procedures designed to obtain sufficient appropriate audit evidence regarding the identification and disclosure by management of related parties and the effect of related party transaction and the effect of related party transactions that are material to the financial statements

RESPONSIBILITY OF AUDITORS
Perform audit procedures Obtain sufficient appropriate audit evidence Objective:
Identify related parties Disclosure of related parties Disclosure of related parties transactions

Responsibility of management:
Recording and disclosures in financial statement.

THE NEED TO KNOW RELATED PARTY INFORMATION

Disclosures in the financial statements effects on the financial statements. Auditors' assessment of the reliability of evidence. Motivation of transactions other than business considerations.

IMPLICATIONS OF RELATED PARTY TRANSACTIONS


Related party transactions are valid. They create transactions that benefit one party in terms of profits or cost savings It does not reflect a true and fair view of the financial statements as compared to if the transactions take place with outside parties. The transactions require adequate disclosures The judgments are important for the minority interests.

RELATED PARTY TRANSACTIONS For public listed companies & subsidiaries Enterprises are considered to have RPT:
Directly or indirectly (through intermediaries) control, are controlled by, or under common control with the reporting enterprise. Directly or indirectly (through intermediaries) exercise significant influence over or are subject to significant influence by with the reporting enterprise. Controlled by the same enterprise which exercise significant influence over the reporting enterprise.

Continued
Subject to significant influence by the same enterprise which exercise significant influence over the reporting enterprise. Individuals owning voting power. Key management personnel responsible for planning, directing & controlling activities. Substantial interest in voting power is owned by individual or key mgt. Pension/provident funds for employees.

Kewujudan UPB
1. Pinjam meminjam pada kadar lebih tinggi / rendah dari pasaran 2. Belian/jualan aset pada harga sangat berbeza dari biasa (unusual prices) 3. Pertukaran aset secara langsung 4. Pemberian pinjaman tanpa syarat jadual bayaran tertentu dengan sedikit atau tanpa sekuriti. 5. Urusniaga Jaminan

6. Kewujudan urusniaga yang tidak mempunyai asas (no apparent logical business reason for occurrence). 7. Urusniaga substance differs from form. 8. Urusniaga di proses secara luarbiasa. 9. Urusniaga/volum yang tinggi dengan pelanggan/pembekal tertentu berbanding dengan pihak lain. 10. Urusniaga tak direkod receipt or provision of mgt services at no charge.

Kepastian Kewujudan UPB


Menilai prosedur syarikat berkaitan UPB, jika ada. Pertanyaan akan senarai pihak terlibat UPB. Semak senarai pengarah yang berkhidmat dalam syarikat lain. Senarai dana pencen yang berkaitan dan pengurusannya. Semak daftar senarai pemegang saham besar (>20%) & kuasa mengundi besar Review pelaburan besar yang mungkin mewujudkan UPB

TRANSACTIONS WITH RELATED PARTIES


Auditor to review information provided by directors and mgt identifying related party transactions. Be alert for other material related party transactions. Accounting & Internal Control System to consider the adequacy of control procedures over the authorization and recording of related party transactions.

AUDIT PROCEDURES
EXISTENCE & DISCLOSURE OF RELATED PARTIES

Auditor to review info provided by directors & mgt identifying names of all known RP and should perform the following procedures in respect of the completeness of this info:
a) Review prior years working papers for names of known RP b) Review the cos procedures for identification of RP c) Inquire as to the affiliation of directors and officers with other cos.

d)

e)
f) g)
h)

Review shareholders records to determine the names of principal shareholders or, if appropriate, obtain a listing of principal shareholders and the board of directors from the share register. Review minutes of the meetings of shareholders and the board of directors and other relevant statutory records such as the register of directors interests. Inquire of other auditors currently involved in the audit, or predecessor auditors, as to their knowledge of additional related parties. Review the entitys income tax returns and other information supplied to regulatory agencies.
Ensure adequate disclosure as required by the standards

TRANSACTIONS WITH RELATED PARTIS


Review of information from management identify RPT & material RPT Consider adequacy of ICQ procedures for authorization & recording of RPT.
Unusual transactions & indication of the existence of previously unidentified RP Procedures to identify the existence of transactions

EXAMINATION OF RP TRANSACTIONS
Evidence that transactions have been recorded Additional procedures:
Confirmation with RP Inspection of evidence with RP Confirmation from associated parties.

Management representations completeness & adequate RP disclosures Modify audit report if auditors unable sufficient appropriate audit evidence & inadequate disclosures.

DISCLOSURES
Regulations for disclosures of certain categories of RP. MASB 1 - amounts payable to and receivable from parent enterprise, fellow subsidiaries and associates, other related parties. MASB 11 -& MASB 12 - list of significant subsidiaries & associates MS AB 3 - extraordinary items & items of income & expense within P+L from ordinary activities with such size, nature or incidence - that is relevant to explain the performance. Disclosure of RPT where control exists regardless of the existence of transactions. RPT with transactions - disclose the nature of RPT, identities of RP, types & elements of transactions Disclosures in aggregate - if understanding the effects is not necessary.

If, in the auditors judgment, the risk of significant related parties remaining undetected is low, these procedures may be modified as appropriate. Auditor must be satisfied that disclosures are adequate.

NO DISCLOSURES OF TRANSACTIONS
In:
Consolidated financial statements for intra-group transactions. Parent financial statements published with the consolidated financial statements. Financial statements of a wholly-owned subsidiaries. Financial statements of state controlled enterprises.

RELATED PARTY ISSUES


Related party relationships (RPT) are a normal feature RPT affects the financial position and operating results - by the type or amount of transaction RPR affects the financial position even without RPT Effects of influence which do not lead to RPT is difficult to determine, hence disclosure of such effects is not required A price agreed between parties & flexibility in price-setting process. Existence of a variety of methods. The comparable uncontrolled price method. The resale price method is used for goods transferred before sale to independent parties. If RPT price is not determined - disclosures in financial statements is still necessary. Transactions that would not have taken place if the relationships does not exist.