Confirm related-party balances without assuming both sides agree

Use the company's approved related-party population and identify the exact legal counterparty for each balance. Include the nature of the relationship and the agreements supporting transactions. A familiar trading name can cover several entities, and a shared owner does not mean that every balance belongs in the same account. Ask the accountant to assess the reporting population under the applicable framework.

IAS 24 addresses related-party relationships, transactions, outstanding balances, and commitments for IFRS disclosures. It includes transfers even when no price is charged. A close request should therefore ask about relevant terms and unrecorded arrangements as well as the numerical balance, while keeping the disclosure assessment with the responsible accountant.

Provide the reporting date, entity, currency, and relevant transaction identifiers. Ask the counterparty to return its own balance and detail rather than merely approve the number the company supplied. This is an internal reconciliation request; if an auditor requires a formal confirmation, follow that auditor's controlled process and do not substitute a management-collected response.

Request terms such as repayment timing, interest, security, guarantees, or conditions where relevant. Distinguish written agreements from informal understandings and identify any changes. A matching amount does not prove that the two parties understand the obligation in the same way. The accounting reviewer may need both the numerical agreement and the contractual explanation.

Compare original references and dates to identify missing activity, classification differences, currency effects, and entries posted after cutoff. Preserve each party's original response before preparing the bridge. Avoid asking the counterparty to change its balance merely to match the requesting company's records; establish which evidence supports the correct treatment on each side.

In a hypothetical comparison, one entity reports $42,000 receivable while the counterparty reports $37,000 payable. The $5,000 difference relates to a service charge not yet accepted by the recipient. Record that specific item and the underlying agreement. A matching entry may ultimately be appropriate, but numerical symmetry alone is not evidence that the service or rate was valid.

Some related parties belong within a consolidation group and others do not. Ask the group accountant which balances enter eliminations and which remain external to the reporting group. Related-party status should not automatically trigger elimination. Retain the approved consolidation perimeter and disclosure population so the difference is visible.

Also identify commitments, guarantees, or transactions with no closing balance that still need assessment. A zero balance confirmation can miss a material arrangement settled during the year. Provide activity and agreement information to the disclosure preparer, who should determine what the framework requires. The reconciliation schedule should not make that decision solely from the year-end total.

Record who supplied the response, when it was received, what it covered, and any exclusions. Investigate missing responses using alternative evidence and identify the resulting limitation. An unanswered request is not confirmation that the recorded amount is correct. Escalate material unresolved differences before the relevant report is released.

Save the counterparty detail, transaction bridge, approved corrections, terms, and disclosure handoff together. At the next close, carry forward unresolved items with their original references and dates. The completed record should explain both the amount owed and the relationship behind it, including any facts the parties have not yet agreed.