1.Sir, in SA 550, there is a reference to examine the significant related party transaction in which Auditor shall inquire the management about such transactions and he shall also try to know the nature of transactions. Now, how can it be determined whether the transaction is significant or not? Will significance be linked with materiality as per SA 320?
2.Incase of question asked on related party transaction, the answer of SA 500 shall be harmonised with AS 18 and sec. 188 of companies act, 2013. Can reference of Ind AS and Para 3 clause 13 be also added?
3.Sir, can you please give an example of significant related party transaction outside the entity’s normal course of business?
- Word significant should be judged with context in which it is used, if we are talking about financial statement or audit report it is something which can change or influence decision of users of financial statements or audit report.
Now if we are talking about communication to TCWG, matter will be significant if it can lead to change or influence decision making of TCWG.
So if anything which can change or influence users it will be significant. Yes it is same as materiality when we are talking about users of financial statements.
- Yes you can give reference of caro and ind as also
- Renting premises to related parties without any charge or complicated transaction of change in equity instruments of related parties or sale to related parties at 75% discount etc