CAS 550, Related Parties

Ef­fec­tive date:

Effective for audits of financial statements for periods ending on or after December 14, 2010.

[Canadian Auditing Standard (CAS) 550, Related Parties, should be read in conjunction with CAS 200, Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Canadian Auditing Standards.]


This Canadian Auditing Standard (CAS) deals with the auditor's responsibilities relating to related party relationships and transactions in an audit of financial statements.

Because related parties are not independent of each other, many financial reporting frameworks establish specific accounting and disclosure requirements for related party relationships, transactions and balances to enable users of the financial statements to understand their nature and actual or potential effects on the financial statements. Where the applicable financial reporting framework establishes such requirements, the auditor has a responsibility to perform audit procedures to identify, assess and respond to the risks of material misstatement arising from the entity's failure to appropriately account for or disclose related party relationships, transactions or balances in accordance with the requirements of the framework.

Even if the applicable financial reporting framework establishes minimal or no related party requirements, the auditor nevertheless needs to obtain an understanding of the entity's related party relationships and transactions sufficient to be able to conclude whether the financial statements, insofar as they are affected by those relationships and transactions: (a) achieve fair presentation (for fair presentation frameworks); or (b) are not misleading (for compliance frameworks).

In addition, an understanding of the entity's related party relationships and transactions is relevant to the auditor's evaluation of whether one or more fraud risk factors are present as required by CAS 240, The Auditor's Responsibilities Relating to Fraud in an Audit of Financial Statements, because fraud may be more easily committed through related parties.

His­tory of CAS 550

There have been no amendments to CAS 550 since its date of issue.

Note: Our history summary does not take into account consequential amendments made as the result of other projects.

Amendments under consideration

  • None

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.