ASC 850: Mastering Related Party Disclosures Compliance with Accounting Software

Posted In | ASC Accounting

Accounting Standards Codification (ASC) Topic 850, Related Party Disclosures, provides guidance on the disclosure of related party transactions and relationships in financial statements. Ensuring compliance with ASC 850 can be complex, as it requires accurate identification, measurement, and presentation of related party transactions. To address these challenges, companies are increasingly adopting accounting software and best practices to streamline their compliance efforts and enhance the accuracy of their financial reporting. In this article, we will explore some of the tools and strategies that can help companies master related party disclosure compliance with ASC 850.

 

1. Implementing Advanced Accounting Software

One of the key challenges in complying with ASC 850 is the accurate identification and measurement of related party transactions. Advanced accounting software can assist companies in automating the identification, measurement, and recording of related party transactions, ensuring accurate and consistent application of ASC 850 guidelines.

 

Key features to look for in advanced accounting software include:
 

• Support for various related party transaction types, such as sales, loans, and guarantees
   

• Integration with financial reporting and enterprise resource planning (ERP) systems
   

• Automated identification and recording of related party transactions
   

• Comprehensive reporting and analytics capabilities

 

2. Developing a Robust Internal Control Framework

A strong internal control framework is essential for ensuring the accurate and consistent application of ASC 850 guidelines. Companies should establish clear policies and procedures for the identification, measurement, and documentation of related party transactions and relationships.

 

Key steps in developing an effective internal control framework include:
 

• Defining clear roles and responsibilities for each stage of the related party disclosure process
   

• Developing written policies and procedures for the identification, measurement, and documentation of related party transactions and relationships
   

• Establishing a formal process for reviewing and approving related party disclosures
   

• Implementing regular internal audits to assess compliance with ASC 850

 

3. Leveraging Expertise and Professional Services

Given the complexities of ASC 850, many companies choose to collaborate with external experts and professional services providers to help them navigate the intricacies of the standard. By working with experienced accounting professionals, businesses can access valuable insights and guidance to help them optimize their related party disclosure processes and ensure accurate financial reporting.

 

4. Adopting a Continuous Improvement Mindset

In order to stay current with the ever-evolving regulatory landscape, companies must embrace a continuous improvement mindset when it comes to ASC 850 compliance. This involves regularly reviewing and updating related party disclosure methodologies, staying informed about changes in accounting standards, and adopting new technologies and best practices as they become available.

 

Key steps to fostering a continuous improvement culture include:
 

• Regularly evaluating related party disclosure methodologies for accuracy and efficiency
   

• Staying informed about changes in accounting standards and regulations
   

• Encouraging ongoing education and training for accounting staff
   

• Implementing a robust internal audit process to ensure compliance

As businesses face increasing pressure to comply with complex accounting standards like ASC 850, the adoption of modern solutions and best practices has become essential. By implementing advanced accounting software, developing a robust internal control framework, leveraging expertise and professional services, and adopting a continuous improvement mindset, companies can streamline their compliance efforts and enhance the accuracy of their financial reporting. As the regulatory landscape continues to evolve, staying current with these tools and strategies will be critical for companies seeking to maintain compliance and make informed decisions regarding their related party disclosures.