New auditing standard hones in on related parties

Description

Abstract: As part of its continuing effort to combat financial reporting fraud, the PCAOB recently issued Release No. 2014-002, which adopted Auditing Standard No. 18, Related Parties, and amended certain existing standards. The new standard and amendments are designed to strengthen auditor performance in three critical areas that present a heightened risk of material misstatements in a company’s financial statements: related party transactions, significant unusual transactions, and financial relationships or transactions with executives. This article looks at the details.