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Evidence

Related parties

5.1 Accounting treatment

IAS 24 Related Party Disclosures requires related party transactions to be disclosed
in the financial statements.

Disclosure should be made of:

 The relationship between the parties

 The transaction amount and any balance owing at the year-end

 Any allowance for irrecoverable receivables

5.2 Audit risks

 Directors may be reluctant to disclose transactions, particularly in the case of
family members.

 Transactions may not be easy to identify from the accounting systems because
they are not separately identified from normal transactions.

 Transactions may be concealed in whole, or in part, from auditors for fraudulent
purposes.

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