Related Party

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September 15, 2015 at 6:05 pm #272025
nari
Member
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Hello Mike
I’m reading an ACCA article here on related party and it mentions the following regarding risk of material misstatement:
“Risks about the ability of the company to continue in business as a going concern – if the entity’s interest is constantly subordinated to that of related parties. ”
What exactly is meant by “entity’s interest” and why is it a risk?
The article can be found here:
https://www.accaglobal.com/us/en/discover/cpd-articles/audit-assurance/related-parties15.html
Its one of the points under Higher Risk.
Regards
September 15, 2015 at 7:59 pm #272041
MikeLittle
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The expression “the entity’s (A) interest is subordinated to that of related (B) parties” means that, in dealing with the outside world, the related (B) party deals in its own best interests rather than in the best interests of “the entity” (A)
Ok?
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