ISA 550 — Related Parties
ISA 550 is an international pronouncement addressing audit responsibilities regarding related-party relationships and transactions. It addresses obtaining an understanding of related-party relationships and transactions, identifying and assessing related risks, and responding appropriately. A transaction at arm’s length cannot simply be assumed because management describes it that way.
Worked example
The auditor investigates an undisclosed transaction with an entity controlled by a director.
Common mistake
Management’s description of a related-party transaction as arm’s length is not sufficient evidence by itself.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | AAA (INT) | Supporting | September 2026–June 2027 |