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Can you list five instances were the risk of undisclosed related party transactions going undiscovered by the auditors is high?

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Question ajoutée par Frank Mwansa , ACCOUNTING LECTURER , FREELANCER
Date de publication: 2016/02/16
Narendran Selvakumar
par Narendran Selvakumar , Manager - Internal Audit , Larsen & Toubro Limited

  • The entity’s related parties may operate in a complex network of relationships making related party transactions difficult to unravel
  • The entity’s information systems may not be effective in identifying and recording related party relationships and transactions.
  • Transactions with related parties may not take place on normal commercial terms, even though, prima facie, the price charged may be in line with that of similar arm’s length transactions.
  • Management may be unaware of the existence of some related party relationships and transactions because it may not grasp the complexity of their structure and the interaction with relevant reporting requirements.
  • Related party relationships may offer the opportunity for collusion, manipulation or concealment by management and, consequently, present a heightened risk of fraud. 

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