Related Party Transaction Schedule: AS 18 and Companies Act Evidence File
Related-party schedules should not be prepared from memory at audit time. Finance needs a live register of parties, transactions, balances, approvals and disclosures.
For broader context, see the Companies Act, MCA and Startup Compliance Hub.
Detailed analysis
AS 18 establishes disclosure requirements for related-party relationships and transactions. The finance risk is missing entities controlled by founders/directors, unrecorded balances, or transactions not supported by contracts/approvals.
Practical example
Founder-owned company provides marketing support worth ₹6 lakh. Finance checks related-party status, agreement, invoice, board/approval requirement, arm’s-length support and disclosure in financial statements.
Evidence and control checklist
| Area | What to check | Evidence to save |
|---|---|---|
| Related party master | Directors, KMP, relatives, group entities and control relationships. | Declaration forms and entity chart. |
| Transaction capture | Sales, purchases, loans, reimbursements and guarantees. | Ledger extract and contract/invoice support. |
| Approval trail | Board/shareholder/audit committee as applicable. | Minutes, resolutions and approval notes. |
| Balance confirmation | Receivable/payable/loan balances. | Confirmations and ageing. |
| Disclosure | AS 18/Schedule III disclosure support. | Disclosure schedule and management representation. |
For the connected rule, example or next step, see Founder Salary and Reimbursement Controls: Related-Party and Tax Evidence.
Common mistakes
- Relying only on vendor/customer name search.
- Missing founder-controlled entities.
- No balance confirmations.
- Transactions without agreement or approval.
- Disclosure prepared after audit queries only.
Official reference framework
Based only on official India Code, MCA and ICAI source pages listed below. Check the latest Companies Act, Schedule III, accounting standards, Ind AS/AS applicability and auditor guidance before closing or filing.
Official sources used
This article is intentionally source-limited to official India Code, MCA and ICAI material. Source validation date: 17 June 2026. Verify final positions with latest Companies Act, Schedule III, accounting standards, Ind AS/AS applicability and auditor guidance before closing or filing.
- ICAI: Accounting Standard (AS) 18 Related Party Disclosures
- ICAI: Accounting Standards as on February 1, 2022
- India Code: Companies Act, 2013 official PDF
- India Code: Schedule III to the Companies Act, 2013
For the connected rule, example or next step, see ESOP Scheme Under Companies Act: Section 62(1)(b) Control Checklist.
FAQs
Disclosure of related-party relationships and transactions under applicable standard/law.
Directors/KMP/founders and management should provide declarations.
Yes, especially material related-party balances.
Yes. Companies Act and governance approvals may apply based on facts.
Declarations, contracts, ledgers, approvals and disclosure schedule.
Source and review trail
Use the current official instrument, portal or regulator publication before acting. This panel separates the category authority from page-specific references.
- Primary category
- Companies Act & MCA
- Official starting point
- www.mca.gov.in