Related Party Issues

Question 0

If there is a significant risk in a related party transaction what should the auditor do?

Answer 0

Perform substantive procedures such as:

Confirm specific transactions with rated parties

Inspect evidence in the possession of the entity or the related party

Confirm information with intermediaries such as banks or others

Review financials of income tax returns or reports issued to assess financial condition of other party

Question 1

Auditor should stay alert for related party transactions by reviewing bank confirmations records documents and reading the minute did meetings of those charged with governance

Answer 1

True

Question 2

What helps an auditor in identifying related party transactions?

Answer 2

Reviewing confirmations of loans receivable and payable for indication of guarantees

Question 3

In auditing related party transactions, the auditor places primary emphasis on?

Answer 3

The adequacy of the disclosure of the unrelated party transactions

Ensure that disclosure of related party transactions in the audited financial statements is adequate

Question 4

What should an auditor do after determining that a related party has in fact occurred?

Answer 4

Obtain an understanding of the purpose of the transaction

Question 5

What can indicate the existence of related parties?

Answer 5

Making a loan without scheduled terms for repayment of the funds

Question 6

What can indicate a related party transactions?

Answer 6

Reviewing confirmation of loans receivable and payable for indications of guarantees is one of the auditing procedures that will assist the auditor in identifying related party transactions.