Having Identified Related Party Transactions, the Auditor Should

question 36

Multiple Choice

Having identified related party transactions, the auditor should:

• A)Confirm the terms and amounts of the transactions with the related parties.
• B)Inform the audit committee in writing.
• C)Consult with a fraud specialist to consider extended procedures.
• D)Consider including an emphasis of matter paragraph in the audit opinion.

---

Definitions:

Fair Value Allocations

The process of assigning fair value to the individual assets and liabilities acquired during a business combination.

Investment

The act of allocating resources, usually money, with the expectation of generating an income or profit over time.

Acquisition Method

An accounting process used during the consolidation of financial statements that involves combining the buying and selling entities' assets and liabilities.

Consolidated Financial Statements

Financial documents that combine the accounting records of a parent company and its subsidiaries, presenting the financial position as if they were a single entity.