Auditing economic substance of transactions with related parties: auditor’s position to influence direction of cross-border investments

Author:Marina SERAFIMOSKA, Atanasko ATANASOVSKI

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Keywords:auditing, economic substance, related parties, financial statements, disclosure

Abstract:
Globalization of world economy in 21st century, spreading interests of multinational companies has released economic borders and obstacles worldwide. Foundation and acquisition of almost every economic cell that creates value by few leaders of modern business, questions, conditions and terms of economic transactions between group members, their recording and presentation in front of the public worldwide. \r\n\r\nEconomic substance of transactions with related parties can’t be considered only as precondition for accurate and objective determination of local corporate tax liability, but prerequisite for true and fair view on financial performance and position of each reporting entity. Auditors considering policies and procedures for identification, proper recording and disclosure of related party transactions increasing credibility in standalone financial statements, influence economic decisions of investors and lead investments towards greater global growth and welfare.

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