Document ID: chunk:federal_register_of_legislation:F2023C01132:reg:23:p14
Version: federal_register_of_legislation:F2023C01132
Segment Type: reg
Provision Reference: reg 23 (pt 14/23)
Character Range: 47114–50587

exist over these, through enquiry of management combined with other procedures, such as observation of management's oversight and review activities, and inspection of available relevant documentation.

Authorisation and approval of significant transactions and arrangements (Ref: Para. 14(b))

A21.         Authorisation involves the granting of permission by a party or parties with the appropriate authority (whether management, those charged with governance or the entity's shareholders) for the entity to enter into specific transactions in accordance with pre‑determined criteria, whether judgemental or not.  Approval involves those parties' acceptance of the transactions the entity has entered into as having satisfied the criteria on which authorisation was granted.  Examples of controls the entity may have established to authorise and approve significant transactions and arrangements with related parties or significant transactions and arrangements outside the normal course of business include:

           * Monitoring controls to identify such transactions and arrangements for authorisation and approval.

           * Approval of the terms and conditions of the transactions and arrangements by management, those charged with governance or, where applicable, shareholders.

Maintaining Alertness for Related Party Information When Reviewing Records or Documents

Records or Documents That the Auditor May Inspect (Ref: Para. 15)

A22.         During the audit, the auditor may inspect records or documents that may provide information about related party relationships and transactions, for example:

           * Third‑party confirmations obtained by the auditor (in addition to bank and legal confirmations).

           * Entity income tax returns.

           * Information supplied by the entity to regulatory authorities.

           * Shareholder registers to identify the entity's principal shareholders.

           * Statements of conflicts of interest from management and those charged with governance.

           * Records of the entity's investments and those of its superannuation plans.

           * Contracts and agreements with key management or those charged with governance.

           * Significant contracts and agreements not in the entity's ordinary course of business.

           * Specific invoices and correspondence from the entity's professional advisors.

           * Life insurance policies acquired by the entity.

           * Significant contracts re‑negotiated by the entity during the period.

           * Reports of the internal audit function.

           * Documents associated with the entity's filings with a securities regulator (for example, prospectuses).

           * Arrangements that may indicate the existence of previously unidentified or undisclosed related party relationships or transactions.  (Ref: Para. 15)

A23.         An arrangement involves a formal or informal agreement between the entity and one or more other parties for such purposes as:

           * The establishment of a business relationship through appropriate vehicles or structures.

           * The conduct of certain types of transactions under specific terms and conditions.

           * The provision of designated services or financial support.

    Examples of arrangements that may indicate the existence of related party relationships or transactions that management has not previously identified or disclosed to the