Global audit board tackles related party abuse
July 30, 2008
A global audit board has taken steps to tackle the involvement of related parties in major corporate scandals by releasing new guidance.
The International Auditing and Assurance Standards Board (IAASB) has issued a new rule that clarifies how auditors should handle related parties, which can include a company’s controlled entities, shareholders, or management. International standard on auditing 550 (ISA 550) comes in an effort to combat the misuse of this term as seen in cases such as Enron, when it was used to distort earnings and hide items from financial statements.
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