Claudia Martel knows that financial reporting fraud transactions require disclosure. However, she is not sure whether related party transactions require disclosure. You advise her
That related party transactions require
A) disclosure.
B) no disclosure.
C) disclosure only if there is risk of fraud.
D) auditor judgment.

Question

Quizplus · Accepted Answer

Related party transactions require disclosure according to generally accepted accounting principles (GAAP) and financial reporting standards. This includes transactions with affiliates, subsidiaries, and key management personnel. Disclosure is necessary to ensure transparency and help stakeholders understand potential conflicts of interest or bias. Additionally, disclosures related to related party transactions can also help auditors detect financial statement fraud. Therefore, related party transactions should always be disclosed in financial statements.

Claudia Martel Knows That Financial Reporting Fraud Transactions Require Disclosure