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Autumn 2018

The document provides guidance on audit procedures related to identifying related parties and related party transactions. It discusses: 1) Procedures an auditor should perform to ensure completeness of the list of related parties provided by directors, such as obtaining written representation from management and reviewing for undisclosed transactions. 2) Substantive procedures an auditor should undertake for significant related party transactions outside the normal course of business, such as examining supporting documentation and obtaining confirmation. 3) Steps an auditor should take as part of audit planning for a listed company to identify all related party relationships and transactions, including reviewing prospectuses and agreements for new relationships.

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54 views3 pages

Autumn 2018

The document provides guidance on audit procedures related to identifying related parties and related party transactions. It discusses: 1) Procedures an auditor should perform to ensure completeness of the list of related parties provided by directors, such as obtaining written representation from management and reviewing for undisclosed transactions. 2) Substantive procedures an auditor should undertake for significant related party transactions outside the normal course of business, such as examining supporting documentation and obtaining confirmation. 3) Steps an auditor should take as part of audit planning for a listed company to identify all related party relationships and transactions, including reviewing prospectuses and agreements for new relationships.

Uploaded by

Harutra
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Autumn 2018

Spring 2018

Autumn 2017

Autumn 2016 - Q.4

Specify the procedures that an auditor should perform to ensure completeness of the list of related parties
provided by the directors. 06

As part of audit procedure you have requested the management of Energy Limited to provide specific
representation relating to completeness of related parties and related party transactions.

The management is of the view that since the auditor has carried out a detailed review in which no
undisclosed transactions were identified, a written representation is not necessary.

Required:
Evaluate the above situation, comment on the management’s stance and suggest the appropriate course
of action available to the auditor. 06

Autumn 2015 - Q.1 (c)

A schedule of related party transactions provided by the client includes two significant transactions which
are outside the normal course of business. State the substantive procedures that an auditor should
undertake, in respect of these transactions. 04
Spring 2015 – Q.6

You are the audit manager on the audit of a listed company, Kamil Limited (KL). Prior to completion of
audit, you came across a prospectus issued by Neelum Limited (NL) according to which a director of KL
is the chief executive of NL. However, the name of NL was not included in the list of related parties
provided by KL. On being confronted the management has advised that the name was omitted
inadvertently as the appointment took place just two months prior to the year end.
Required:

Discuss your course of action in the above situation. 07

Autumn 2014 – Q.10 (i)

Give any three audit procedures to ensure completeness of list of related parties provided by the
management. 03

Spring 2014 – Q.7

While reviewing the audit working papers of Apple Limited (AL), the following matters have come to your
attention:

(i) The audit team was able to ascertain that AL has entered into a number of transactions near the year-
end with a new distributor Fruits Limited (FL), which is a related party. On being confronted, the
management has informed that since there were no transactions with FL in the past, its inclusion in the
schedule of related party transactions was inadvertently omitted. 05

(ii) The details of related party transactions provided by the management includes a payment of Rs. 300
million to Mango Limited. The job in-charge is of the view that this transaction is not in normal course of
business of the company. 04

Required:
Analyses each of the above situations and briefly describe your course of action.

Spring 2013 – Q.5 (a)

Strong Vehicles Limited (SVL) manufactures heavy vehicles. As the job in-charge on SVL’s audit, you
have come across the following situations:
The management had provided you with a representation that they had disclosed all the related party
transactions and relationships of which they were aware. However, before finalization of the audit, you
found that subsequent to the year-end, a payment of Rs. 100 million has been made to Strong Engines
Plc (SEP), a company incorporated in a foreign country. On your query, the management has advised
you that SEP is a foreign subsidiary of SVL and its name was not disclosed inadvertently because it had
been non-operational for the last many years. 05

Autumn 2011 – Q.5

As the auditor of a listed company with a number of related parties, what steps would you consider as
part of your audit planning to ensure that all related party relationships and transactions are identified and
disclosed in the financial statements. 13

Autumn 2010 – Q.4

Al-Shams Limited is an unquoted public company. A large part of its business is carried out with persons /
organization’s who are related to the management or the shareholders.

Required:
(a) State any eight procedures which an auditor may perform for determining the existence of related
parties or related party transactions.08
(b) Give four examples of situations that may be indicative of dominant influence exerted by a related
party. 04

Autumn 2009 – Q.7

Describe the procedures that the auditor may perform, in order to ensure the completeness of the
information provided by the management, about related parties.
Autumn 2017

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