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Effect of Related Party Accounting Instruction on Students’ Ability to Identify Related Party Transactions in Nigerian Universities

Abstract

Related party accounting instruction is an important component of financial accounting education because it equips students with the knowledge and skills required to recognize and appropriately account for transactions involving individuals or entities with a close relationship to a reporting organization. Students’ ability to identify related party transactions is essential for proper accounting treatment, transparency, and adequate financial reporting. However, students may experience difficulties in recognizing relationships that give rise to related party transactions and distinguishing them from ordinary business transactions. This study therefore examines the effect of related party accounting instruction on students’ ability to identify related party transactions in Nigerian universities. Related party accounting instruction involves teaching students the principles, procedures, and reporting requirements associated with transactions between an entity and its related parties. The instruction exposes students to concepts such as related parties, key management personnel, close family members, parent entities, subsidiaries, associates, and entities under common control. It also enables students to examine the nature of relationships between parties and understand how such relationships may affect the identification, accounting treatment, and disclosure of related party transactions. Students’ ability to identify related party transactions refers to their capacity to examine business relationships and transaction circumstances and correctly determine whether a transaction involves a related party. This includes recognizing relationships between entities and individuals, identifying transactions that fall within the scope of related party accounting, and distinguishing related party transactions from transactions conducted with independent parties. Developing this competence is important because accurate identification provides a foundation for appropriate accounting treatment and disclosure. The study will adopt a survey research design. The population will comprise Accounting Education students in selected Nigerian universities. Data will be collected using a structured questionnaire designed to obtain information on related party accounting instruction and students’ ability to identify related party transactions. The instrument will be subjected to appropriate validation and reliability procedures before administration. Data collected will be analyzed using descriptive and inferential statistics, while the hypothesis will be tested at a 0.05 level of significance. The study is expected to establish that related party accounting instruction has a significant positive effect on students’ ability to identify related party transactions. Effective instruction is expected to improve students’ understanding of related party relationships, transaction characteristics, and disclosure requirements, thereby enhancing their ability to recognize related party transactions in practical accounting situations. The findings are expected to have important implications for the teaching and learning of financial accounting in Nigerian universities. Accounting lecturers may need to incorporate practical relationship-mapping exercises, case studies, transaction-based examples, and scenarios involving parent companies, subsidiaries, associates, management personnel, and other related parties. These approaches may help students develop stronger analytical skills for identifying related party relationships and transactions. The study is expected to benefit Accounting Education students, accounting lecturers, university administrators, curriculum developers, and other stakeholders in accounting education. Students may develop stronger practical competence in analyzing business relationships and identifying related party transactions, while lecturers may gain useful insights for improving instructional strategies. Curriculum developers may also use the findings to strengthen related party accounting content and practical financial reporting activities. The study recommends that accounting lecturers should adopt practical, analytical, and learner-centred approaches when teaching related party accounting. Greater emphasis should be placed on relationship analysis, case-based exercises, transaction classification activities, and practical assessments involving different related party situations. The study concludes that effective related party accounting instruction can improve students’ ability to identify related party transactions and contribute to stronger competence in financial accounting and reporting.

Keywords: Related Party Accounting, Related Party Transactions, Accounting Instruction, Financial Accounting, Accounting Education, Related Parties, Parent Entities, Subsidiaries, Associates, Common Control, Key Management Personnel, Transaction Identification, Financial Reporting, Disclosure Requirements, Accounting Competence