The book series 'Contributions to Finance and Accounting' features the latest research from research areas like financial management, investment, capital markets, financial institutions, FinTech and financial innovation, accounting methods and standards, reporting, and corporate governance, among others. Books published in this series are primarily monographs and edited volumes that present new research results, both theoretical and empirical, on a clearly defined topic. All books are published in print and digital formats and disseminated globally.

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This article illustrates, based on a case study, the steps that companies should follow in order to substantiate the compliance of their related party transactions with the arm's length principle (as required by I.A.S. 24). The case study takes into consideration the provisions of the O.E.C.D. transfer pricing guidelines, and where the application was required of domestic legislation, we applied the Romanian one. We found that the most important step is represented by a comparability analysis between related party transactions and comparable market transactions. Further on, in relation to the comparability analysis, in practice two situations are met: the use of comparable entities' information from the year under analysis and the use of this information from previous years. In this context we selected a sample of comparables and analysed if these two practical approaches impact the final conclusion regarding the compliance with the arm's length principle. We found that there can be a small difference among the results obtained in the two situations. Mainly, the article presents important findings for professionals from the accounting and finance area in order to understand the mechanism of the arm's length principle.