ABC Company engages in a transaction with an entity whose management can control or significantly influence ABC Company's policies, without disclosure. This is an example of what kind of improper disclosure?

• A. Related-party transaction
• B. Accounting change
• C. Improper asset valuation
• D. Significant event

Answer: (A)

A related-party relationship exists when a party can influence ABC Company’s policies, which creates potential conflicts of interest in transactions with that party. Financial reporting requires disclosing such relationships and any related transactions to provide users a full view of how these connections may affect the financial statements. If those disclosures are missing, it’s an improper disclosure. This scenario fits that idea: a transaction with an entity whose management can control or influence ABC’s policies, without disclosure. The other options don’t match because they involve different issues—an accounting change is about changing how values are recorded, improper asset valuation would concern misstated asset values, and a significant event refers to a material occurrence that needs disclosure but not specifically a related-party relationship.