TWSA315 Related Parties

Status

Revised by Auditing Standards Committee in Taiwan on 4 October, 2022

Summary

This Standard deals with the auditor’s responsibilities relating to related party relationships and transactions in an audit of financial statements.

The objectives of the auditor are:

(a) to obtain an understanding of related party relationships and transactions sufficient to be able:

(i)  To recognize fraud risk factors, if any, arising from related party relationships and transactions that are relevant to the identification and assessment of the risks of material misstatement due to fraud; and

(ii) To conclude, based on the audit evidence obtained, whether the financial statements, insofar as they are affected by those relationships and transactions achieve fair presentation; and

(b) to obtain sufficient appropriate audit evidence about whether related party relationships and transactions have been appropriately identified, accounted for and disclosed in the financial statements in accordance with the applicable financial reporting framework.

As part of the risk assessment procedures and related activities that TWSA315 and TWSA240 require the auditor to perform during the audit, the auditor shall perform the audit procedures and related activities set out in paragraphs 10–15 to obtain information relevant to identifying the risks of material misstatement associated with related party relationships and transactions.

The auditor shall identify and assess the risks of material misstatement associated with related party relationships and transactions and determine whether any of those risks are significant risks. In making this determination, the auditor shall treat identified significant related party transactions outside the entity’s normal course of business as giving rise to significant risks.

As part of the TWSA330 requirement that the auditor respond to assessed risks, the auditor designs and performs further audit procedures to obtain sufficient appropriate audit evidence about the assessed risks of material misstatement associated with related party relationships and transactions. These audit procedures shall include those required by paragraphs 19-22.
In forming an opinion on the financial statements in accordance with TWSA700, the auditor shall evaluate:

(a) Whether the identified related party relationships and transactions have been appropriately accounted for and disclosed in accordance with the applicable financial reporting framework; and

(b) Whether the effects of the related party relationships and transactions prevent the financial statements from achieving fair presentation.

Effective date

This Standard is effective from 15 December, 2022.