Related party transactions require meticulous oversight to ensure transparency and trust in financial reporting. If not properly accounted for or disclosed, these transactions can often obscure critical information, making it essential for auditors to adopt robust methods. Given the emphasis and importance of these transactions, they can often be time-consuming and tedious. Therefore, efficiency and repeatability of an approach are paramount for ensuring you stay on budget. MindBridge simplifies this process with advanced AI-driven insights that enable auditors to identify, analyze, and evaluate related party transactions comprehensively and efficiently.
Key Features of MindBridge for Related Party Transaction Testing
Complete Data Analysis
MindBridge automatically analyzes 100% of the dataset, ensuring no transactions are overlooked. By leveraging its AI-powered risk-scoring capabilities, auditors can quickly uncover patterns, anomalies, and discrepancies that might otherwise remain hidden with traditional methods.
Substance Over Form
Not just the favorite adage of all ‘Intro to Business Law’ students, MindBridge goes beyond surface-level details, enabling auditors to evaluate the underlying legitimacy of transactions.
Customizable Filters
Tailor MindBridge’s features to address specific client risks and transaction types, ensuring a targeted and precise audit process. Save these filters for future years or other clients. Work smarter, not harder, am I right?
Good point, Austin. Let’s examine some real-world applications for your audits.
Practical Strategies for Related Party Transaction Testing with AI
Non-Market Transactions
Use MindBridge’s outlier and machine learning capabilities to identify pricing anomalies that may indicate related party involvement. Dive deeper with Transaction Risk Analytics to analyze intermediary involvement and validate findings with management.
“Bill and Hold” Arrangements
Pinpoint revenue transactions lacking inventory movement, particularly those occurring near year-end. MindBridge’s filtering capabilities help auditors identify high-risk entries efficiently and can be used in a repeatable manner.
Unusual Lending Terms
Build custom ratio analyses to detect irregularities, such as interest-free loans or undefined repayment terms. Investigate cash or receivables entries flagged by the system for potential issues.
Nonmonetary Transactions
Highlight rare transaction flows lacking economic substance using MindBridge’s control points. These insights allow auditors to engage management and verify the legitimacy of transactions.
Round-Trip Transactions
Identify closely timed debit and credit transactions with matching amounts. MindBridge’s pattern recognition tools make it easier to detect and scrutinize these activities for potential related party involvement.
Guarantees and Guarantor Relationships
Search general ledger descriptions for keywords like “guarantee” or “collateral” to locate relevant transactions. MindBridge helps auditors investigate these with precision and efficiency.
Enhanced Documentation
Use MindBridge’s audit trail and reporting tools to create comprehensive records of procedures and findings, supporting compliance and audit quality.
Multi-Year Comparisons
Compare transaction data across multiple years to identify trends, patterns, or discrepancies. MindBridge’s ability to process extensive datasets provides auditors with valuable context for deeper insights.
By incorporating MindBridge into their workflows, auditors can enhance both the accuracy and reliability of their related party assessments while also benefiting from efficiency gains.
Ready to Streamline Related Party Testing?
We’ve created a comprehensive guide, Rethinking Related Party Testing with MindBridge, to help you uncover hidden risks, enhance transparency, and ensure compliance with precision AI-driven tools.
For any questions, contact your Customer Success Manager or reach out at info@mindbridge.ai.
About the author: TJ Smith is the Assurance Strategy Program Director at MindBridge, an AI-driven platform for financial risk analysis. A CPA and CISA, TJ combines expertise in accounting and technology to help redefine assurance engagements through AI and analytics. He also teaches accounting and business technology at Bishop’s University, sharing his passion for innovation and data-driven insights.
