PSA-550 - Auditing Standards and Practices Council...

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Philippine Standard on Auditing 550 RELATED PARTIES Auditing Standards and Practices Council
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PSA 550 PHILIPPINE STANDARD ON AUDITING 550 RELATED PARTIES CONTENTS Paragraphs Introduction 1-6 Existence and Disclosure of Related Parties 7-8 Transactions with Related Parties 9-12 Examining Identified Related Party Transactions 13-14 Management Representations 15 Audit Conclusions and Reporting 16 Effective Date 17 Acknowledgment 18-19 Philippine Standards on Auditing (PSAs) are to be applied in the audit of financial statements. PSAs are also applied, adapted as necessary, to the audit of other information and to related services. PSAs contain the basic principles and essential procedures (identified in bold type black lettering) together with related guidance in the form of explanatory and other material. The basic principles and essential procedures are to be interpreted in the context of the explanatory and other material that provide guidance for their application. To understand and apply the basic principles and essential procedures together with the related guidance, it is necessary to consider the whole text of the PSA including explanatory and other material contained in the PSA not just the text which is black lettered. In exceptional circumstances, an auditor may judge it necessary to depart from a PSA in order to more effectively achieve the objective of an audit. When such a situation arises, the auditor should be prepared to justify the departure. PSAs need only be applied to material matters.
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PSA 550 The PSAs issued by the Auditing Standards and Practices Council (Council) are based on International Standards on Auditing (ISAs) issued by the International Auditing Practices Committee of the International Federation of Accountants. The ISAs on which the PSAs are based are generally applicable to the public sector, including government business enterprises. However, the applicability of the equivalent PSAs on Philippine public sector entities has not been addressed by the Council. It is the understanding of the Council that this matter will be addressed by the Commission on Audit itself in due course. Accordingly, the Public Sector perspective set out at the end of an ISA has not been adopted into the PSAs.
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PSA 550 Introduction 1. The purpose of this Philippine Standard on Auditing (PSA) is to establish standards and provide guidance on the auditor's responsibilities and audit procedures regarding related parties and transactions with such parties. Statement of Financial Accounting Standards (SFAS) 24/International Accounting Standard (IAS) 24, “Related Party Disclosures,” provides the accounting guidance with respect to related party disclosures.
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This note was uploaded on 02/26/2011 for the course ACCOUNTING 310 taught by Professor Cruz during the Spring '11 term at Xavier - Ateneo de Cagayan.

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PSA-550 - Auditing Standards and Practices Council...

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