When Auditing Related Party Transactions, an Auditor Places Primary Emphasis

question 815

Multiple Choice

When auditing related party transactions, an auditor places primary emphasis on:

• A) Ascertaining the rights and obligations of the related parties.
• B) Confirming the existence of the related parties.
• C) Verifying the valuation of the related party transactions.
• D) Evaluating the disclosure of the related party transactions.

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Definitions:

Stock Price

The current price at which a share of a company is bought or sold in the financial markets.

Fair Value

The estimated price at which an asset or liability could be traded in an open market transaction, reflecting the current value rather than historical cost.

Exit Price

The amount that could be received for selling an asset or transferring a liability in an orderly transaction between market participants at the measurement date.

Asset

Resources owned or controlled by a person or company, capitalized on the balance sheet, expected to provide future economic benefits.