Why Are Related Party Transactions a Risk Area for Auditors

question 20

Multiple Choice

Why are related party transactions a risk area for auditors?

• A) they have minimal disclosure requirements.
• B) they have a higher than average risk of irregularities.
• C) they have a direct impact on profit.
• D) they are difficult to assess.

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Definitions:

Interposition

A visual clue in depth perception, where an object overlapping another is perceived as closer to the viewer.

Convergence

The coming together of different factors or phenomena to a single point.

Aerial Perspective

A technique in art and photography that creates depth by depicting how the atmosphere affects the appearance of objects as they recede into the distance, often showing them as bluer, lighter, and less detailed.

Shadowing

A technique used in cognitive psychology where a participant repeats speech immediately after hearing it to study attention, language processing, and memory.