Document ID: chunk:federal_register_of_legislation:F2023C01132:reg:23:p17
Version: federal_register_of_legislation:F2023C01132
Segment Type: reg
Provision Reference: reg 23 (pt 17/23)
Character Range: 56261–59470

specific aspects of the transactions with intermediaries such as banks, law firms, guarantors, or agents, where practicable and not prohibited by law, regulation or ethical rules.

           * Confirming the purposes, specific terms or amounts of the transactions with the related parties (this audit procedure may be less effective where the auditor judges that the entity is likely to influence the related parties in their responses to the auditor).

           * Where applicable, reading the financial report(s) or other relevant financial information, if available, of the related parties for evidence of the accounting of the transactions in the related parties' accounting records.

A33.         If the auditor has assessed a significant risk of material misstatement due to fraud as a result of the presence of a related party with dominant influence, the auditor may, in addition to the general requirements of ASA 240, perform audit procedures such as the following to obtain an understanding of the business relationships that such a related party may have established directly or indirectly with the entity and to determine the need for further appropriate substantive audit procedures:

           * Enquiries of, and discussion with, management and those charged with governance.

           * Enquiries of the related party.

           * Inspection of significant contracts with the related party.

           * Appropriate background research, such as through the Internet or specific external business information databases.

           * Review of employee whistle‑blowing reports where these are retained.

A34.         Depending upon the results of the auditor's risk assessment procedures, the auditor may consider it appropriate to obtain audit evidence without testing the entity's controls over related party relationships and transactions.  In some circumstances, however, it may not be possible to obtain sufficient appropriate audit evidence from substantive audit procedures alone in relation to the risks of material misstatement associated with related party relationships and transactions.  For example, where intra‑group transactions between the entity and its components are numerous and a significant amount of information regarding these transactions is initiated, recorded, processed or reported electronically in an integrated system, the auditor may determine that it is not possible to design effective substantive audit procedures that by themselves would reduce the risks of material misstatement associated with these transactions to an acceptably low level.  In such a case, in meeting the ASA 330  requirement to obtain sufficient appropriate audit evidence as to the operating effectiveness of controls,[26] the auditor is required to test the entity's controls over the completeness and accuracy of the recording of the related party relationships and transactions.

Identification of Previously Unidentified or Undisclosed Related Parties or Significant Related Party Transactions

Existence of Related Parties (Ref: Para. 21)

Aus A34.1 In determining whether underlying circumstances confirm the existence of related party relationships or transactions, the