Reasons for the Requirement to Disclose Related-Party Transactions Include

question 2

Multiple Choice

Reasons for the requirement to disclose related-party transactions include:

• A) These transactions will always be eliminated in a consolidation so otherwise there would be no record of them in a set of consolidated accounts.
• B) There is a history of corporate scandals involving related-party transactions in Australia, the US, the UK and Canada.
• C) There is a risk that the auditor may be a related party and this must be disclosed.
• D) There is a history of corporate scandals involving related-party transactions in Australia, the US, the UK and Canada and a risk that the auditor may be a related party and this must be disclosed.

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Definitions:

Corn Laws

A series of laws in the 19th century Britain that imposed restrictions and tariffs on imported grain to protect domestic grain producers.

Imports

Goods and services bought by a country from another country, contributing to international trade.

Exports

Goods or services provided by one country to another in exchange for foreign currency, contributing to a country's economic health.

Absolute Advantage

The ability of an individual, company, or country to produce a good or service at a lower cost per unit than the cost at which any other entity produces that good or service.