The following requirements relate to Ms. Stitt's testimony about the CanWest non-compete payments:
(a) The concept of a "related party" is defined by generally accepted accounting principles (GAAP). Review the FASB's Accounting Standards Codification and determine where guidance for related parties in contained in accounting standards
(b) Provide a brief overview of the accounting standards' definition of "related party transactions."
(c) What are the primary accounting requirements for related parties described in ASC? What types of information should be included in financial statements?
(d) Based on your understanding of the concept of "related party transactions," why would the non-compete payments described in this case be considered a "related party transaction?"
In June 2014, the PCAOB issued Auditing Standard No. 18, Related Parties. Visit the PCAOB's website (www.pcaob.org) and locate PCAOB Release No. 2014-002 issued on June 10, 2014 to answer the following questions:
(e) What three critical areas are the subject of this new standard and why did the PCAOB decide those areas should addressed in this new standard?
(f) Summarize the primary auditor responsibilies in the PCAOB's AS 18 regarding the auditor's responsibilities with respect to identifying related party relationships and transactions.