Ask management about related parties, inspect ownership records and board minutes, and examine significant or unusual contracts. Identify the relationship, transactions and outstanding balances so the auditor can assess any required disclosures.
Example and audit implication
A Jengka Furniture director also controls the transport company that delivers its furniture. The auditor examines the transport agreement, checks the delivery charges and year-end amount payable, and assesses whether the financial statements disclose the relationship and transactions as required.
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