Examining Identified Related Party TransExamining Identified Related Party Transactions

Examining Identified Related Party Transactions

29 In examining the identified related party transactions, the auditor shall obtain sufficient appropriate audit evidence as to whether these transactions have been properly recorded and disclosed.

30 Given the nature of related party relationships, audit evidence of a related party transaction may be limited, for example, regarding the existence of inventory held by a related party on consignment or an instruction from a parent company to a subsidiary to record a royalty expense. Because of the limited availability of appropriate audit evidence about such transactions, the auditor ordinarily considers performing audit procedures such as:

• Discussing the purpose of the transaction with those charged with governance and management.
• Confirming the terms and amount of the transaction with the related party.
• Inspecting information in possession of the related party.
• Confirming or discussing information with persons associated with the transaction, such as banks, lawyers, guarantors and agents.