As an audit trainee, how will I audit directors and related party transactions as per international accounting standards?

All transactions with directors must be either by resolutions, discussed and agreed to in the directors meetings, and significant and material transactions record thereof to be recorded in the "register of interest in contracts".

All transactions with a director or key management is a related party, so must be evaluated in terms of "at arms length".  This would be reference to the customer list prices or market related prices obtainable by internet research.

All related parties must be identified by Management, so by questioning of staff recording the entries, do they know who all the related parties are.

The type of company whether it is a listed company or a privately owned company makes a difference as well.  A private company has higher audit risk, as there will be minimal procedures in place by management, and then the audit risk management bonuses, management override on transactions, and the expense being deducted against taxable income, when in fact the transaction is not a normal trading expense. 

For example, a specific director might trade computers through the company, but the main trading activity is printing and signage, then the computer trading activity must be separated to the director loan account.

The audit of the related party balances if they are with COMPANIES within a group of companies, is to agree the general ledger balances.  This if many balances with many companies in the group, then a loan matrix should be the audit working paper. 

Another audit procedure, is observe the financial statements reflect the correct disclosure on related party balances.  You check the opening and closing are in agreement with the counter party, or counter party auditors.

A loan certificate must be obtained and signed by the other party.

As per IAS24, Related Parties Disclosures/ Transactions.

Agreed with the answer Master Ayman

The auditor examined the information provided by the directors and management, which determine the names of all the well-known relationship with their parties and the auditor accomplish the following actions for the purpose of making sure that the information is: - Examination of the work of the previous year papers for the related parties known names- Examine the procedures followed by the facility to determine the related parties- Inquire about managers and other facilities link.- Examination of the records of the meetings of the shareholders and the Board of Directors and other relevant legal records such as the interests of the Register of Directors.- Inquire of the current auditors or audit participants between the former auditor for their information additional parties involved.- Examine the affidavits established special income tax and any other information provided to the competent authorities.- Examination of the terms of trade unusual transactions such as prices and interest rates, guarantees and repayment terms unusual- Check transactions that lack of a logical reason for trading and clear to occur- Check transactions, which are fundamentally different from the traditional method.- Examine the transactions that have been processed in an unusual way.- Examine the large-size transactions or important transactions with some customers over others.- Check transactions unregistered or free allocations for administrative services.- Check endorsements own loans and loans received Muslim and endorsements banks.- Investment transactions such as check buying and selling stakes in a post or another facility.- Make sure the terms and amount of the transaction with related parties

agree with answers >>>>>>>>>>>>>>>><<<<<<<<<<<<<<<<<<<<<<<<<<<<<

agreed with all ....................................

Agree with Bonnie.........