Financial audit in identifying the related and affiliated parties

Author:PhD Student Elena Emilia IORDACHE

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Keywords:related parties; affiliated parties; identification; disclosure in the notes; related and affiliated relations; transactions between parties

Abstract:
During the last period both in the regulation of financial audit activity as well as in regulation of accounting activity, it continues to be established as a general objective, the growth of trust users have in financial reports and in reports published by European companies. For this purpose, shareholders and the other interested parties need reliable information, complete and to be easily accessible. \r\n\r\nOn the one hand, the confidence is linked to the involvement of those who are responsible for preparing and publishing financial statements, and on the other hand with the independence and objectivity of the audit opinion based on financial statements, issued by the financial auditors\r\n\r\nIn this way, the responsibility for presenting the information included in the financial statements in a transparent manner in accordance with the economic reality belongs both of management of the company for the preparation of the financial statements and to the financial auditors for the audit opinion issued on the financial position. \r\n\r\nFor this purpose at European level and in consequence at international level, the concern for on increase in transparency of the information in financial reports requires strict regulations regarding: the disclosure of the transactions with affiliated parties and with related parties, the disclosure of the off- balance sheet commitments and the introduction of a declaration regarding the corporative governance.\r\n\r\nThe accounting and audit regulations considers that information over affiliated and related parties are relevant to the users of financial situations because the existence of the control or influence may affect the term of the transactions between affiliated and related entities.\r\n\r\nThe identification of the reports and terms under those two affiliated parties have transactions is relevant in understanding the financial position of the entity. As a result, the possibility for the user of financial situations to know the existence and the effect of transactions with affiliated and related parties is ensured both by the company when preparing the financial statements and when presenting them and by auditor by issuing an opinion on the audit report.\r\n\r\n\r\n

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