Why do auditors audit related party transactions?
Theoretically, related party transactions carry no higher risk to the financial statement if compared to those unrelated.
But why the auditor is so concerned about related party transactions?
This is because the nature of related party transactions may present a greater opportunity for collusion, concealment, or manipulation by management, resulting in a false result in the financial statements.
Responsibilities of auditor
The auditor shall: -
1. Identify and assess the Risks
2. Responses to the Risks
3. Evaluate the accounting treatment and disclosure
To conclude whether the related party transactions achieve fair presentation and are not misleading
Here are some examples of what auditor may need to inspect, which entity can generate internally: -
1. Minutes of meetings
2. Statements of conflicts of interest
3. Contracts and agreements
4. Invoices and correspondence from the entity’s professional advisors
5. Reports of the internal audit function
Source: https://www.mia.org.my/v2/downloads/handbook/standards/ISA/2018/06/01/ISA_550.pdf
Visit Us
-
Wisma KTP, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru
-
Wisma THK, 41, Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru
KTP (Audit, Tax, Advisory)
An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients
-
Website www.ktp.com.my
-
Instagram https://bit.ly/3jZuZuI
-
Linkedin https://bit.ly/3sapf4l
-
Telegram http://bit.ly/3ptmlpn
THK (Secretarial, Account, Payroll, Advisory)
A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsource booking, accounting and payroll services to clients
-
Website www.thks.com.my
-
Facebook https://bit.ly/3nQ98rs
KTP Lifestyle
An internal community for our colleagues on work and leisure.
-
Tiktok http://bit.ly/3u9LR6Q
-
Youtube http://bit.ly/3ppmjyE
-
Facebook http://bit.ly/3ateoMz
-
Instagram https://bit.ly/3jZpKLo
KTP Career
An external job community on vacancy in Johor Bahru for interns, graduates & experienced candidates.
-
Instagram https://bit.ly/3u2PxHg
-
Facebook http://bit.ly/3rPxz9o
#Ktp #Thks
Published : 1-Apr-2022