Picture a bank statement where every month a large credit arrives from a company whose name shares a word with the borrower’s, and a few days later a smaller debit goes back to it. The family who owns the borrower also owns that company. Before you decide whether those credits are sales, financing or something that needs explaining, what do you actually have to establish?
Two separate facts: who the counterparty is, and what each payment is for. Most misreadings come from treating the first as if it answered the second.
Who counts as a related party?
For a borrower, start from ownership, control, management and relevant family or group relationships. A contact person or a name that happens to appear in a document does not become a related party on that basis alone.
IAS 24 describes relationships arising from control, significant influence, key management and certain connected entities. It is an accounting reference, so how it sits alongside Indonesian accounting and regulatory requirements depends on the context. Indonesian bank regulation also uses the term Pihak Terkait, but for parties related to the bank itself. Because that is a different question from parties connected to the borrower, your report should say which relationship you are assessing.
Is it really the same party?
Bank descriptions often abbreviate a company name, drop words, or carry both sender and recipient in one line. Two similar names can therefore belong to different parties, and a name match on its own is a lead to investigate, not a confirmed relationship.
Use documents and reliable identifiers where you have them, and check whether the name in the description is the account holder, the counterparty or a free-text remark. If the evidence stays inconclusive, record a possible match. Dates matter as well: compare documents valid on the relevant date, so that a former director is not presented as current management. The KYB review of a corporate borrower covers how to read deeds in date order.
What is the payment for?
A confirmed relationship tells you who the counterparty is, not why money moved. An affiliate may buy goods, lend money, contribute capital or receive a refund, and each of those affects the credit assessment differently.
A related-party label alone does not show that a receipt is revenue, that it is non-operating, or that it should be excluded. Establish the purpose from agreements, invoices, accounting records and the borrower’s explanation. If the statement figures came from automated extraction, check the line against the source page first; extracted bank-statement data is quick to confirm when each line can be compared with its source.
Example: PT Sinar Kemas Abadi, a fictitious packaging maker, receives about IDR 450.000.000 each month from CV Kemas Jaya, which belongs to the director’s sister. Reading those credits as sales would put CV Kemas Jaya among the borrower’s main customers. The borrower’s file, however, shows a loan agreement between the two companies, and the monthly debits of IDR 60.000.000 back to CV Kemas Jaya match its instalment schedule. The credits are financing, so they belong in the debt picture rather than in turnover.
Which patterns need follow-up?
Two patterns deserve a closer look once identity and purpose are clear. The first is concentration. Repeated payments from one affiliated customer create concentration risk even when the sales are genuine, so examine that customer’s ability to pay and the borrower’s other outlets.
The second is money sent to an affiliate that later comes back from the same affiliate. Here you ask what commercial or financing purpose the round trip serves and request the records that support it. The pattern is an indication to confirm; how to read it in a statement is covered in round-tripping indicators in bank statements. A relationship diagram is most useful when each link shows its evidence and date, so uncertain identities and roles that have ended stay visible next to the transactions.
Recording the conclusion
Write the findings so a reviewer can see what was confirmed and what was not. Keep the evidence for the relationship and for the payment’s purpose side by side, and do not remove all affiliate transactions from operating receipts by default. Where evidence is incomplete, explain the uncertainty and its materiality; any adjustment you make to bank-statement figures is an analytical judgment, not an audited operating cash-flow number.
This matches the regulatory framing. The OJK asset-quality framework for conventional commercial banks assesses credit quality on business prospects, debtor performance and ability to pay (Article 10), which cannot be reduced to a rule that an affiliated transaction is necessarily adverse.
Checklist before you sign off
- State which relationship you are assessing and the evidence for it, with dates.
- Mark name-only matches as possible matches until identity is confirmed.
- Record the purpose of each material related-party flow and the document that supports it.
- Note concentration on any affiliated customer and the borrower’s alternatives.
- List what remains unverified and how material it is.
Sxored collects the parties named across the file’s documents, links a name automatically only when its identity is proven, and suggests other possible related parties with the reason for each match, for the analyst to confirm. For the next step, see how to read funds that leave and return in a bank statement.
