Which of the following statements is false regarding related parties? a. Management should have controls in place for identifying related parties. b. Related party transactions do... Which of the following statements is false regarding related parties? a. Management should have controls in place for identifying related parties. b. Related party transactions do not have to be disclosed if they are conducted at 'arm's length.' c. A subsidiary company is considered a related party. d. The presence of related parties is considered a fraud risk factor.
Understand the Problem
The question is asking which of the provided statements about related parties is false. This involves evaluating statements concerning management controls, disclosures of related party transactions, definitions of related parties, and implications of their presence related to fraud risks.
Answer
Related party transactions do not have to be disclosed if conducted at 'arm's length.'
The false statement is: Related party transactions do not have to be disclosed if they are conducted at 'arm's length.'
Answer for screen readers
The false statement is: Related party transactions do not have to be disclosed if they are conducted at 'arm's length.'
More Information
Related party transactions must be disclosed regardless of whether they are conducted at 'arm's length.' Full disclosure is important due to potential conflicts of interest.
Tips
A common mistake is assuming 'arm's length' transactions negate the need for disclosure, but transparency remains crucial.
Sources
- AS 2410: Related Parties - PCAOB - pcaobus.org
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