Document ID: chunk:federal_register_of_legislation:F2023C01132:reg:23:p7
Version: federal_register_of_legislation:F2023C01132
Segment Type: reg
Provision Reference: reg 23 (pt 7/23)
Character Range: 26322–29708

if any, and evaluate whether:

(i)                 The business rationale (or lack thereof) of the transactions suggests that they may have been entered into to engage in fraudulent financial reporting or to conceal misappropriation of assets;[11]  (Ref: Para. A38‑A39)

(ii)               The terms of the transactions are consistent with management's explanations; and

(iii)             The transactions have been appropriately accounted for and disclosed in accordance with the applicable financial reporting framework; and

(b)                Obtain audit evidence that the transactions have been appropriately authorised and approved.  (Ref: Para. A40‑A41)

Assertions That Related Party Transactions Were Conducted on Terms Equivalent to Those Prevailing in an Arm's Length Transaction

24.               If management has made an assertion in the financial report to the effect that a related party transaction was conducted on terms equivalent to those prevailing in an arm's length transaction, the auditor shall obtain sufficient appropriate audit evidence about the assertion.  (Ref: Para. A42‑A45)

Evaluation of the Accounting for and Disclosure of Identified Related Party Relationships and Transactions

25.               In forming an opinion on the financial report in accordance with ASA 700,[12] the auditor shall evaluate:  (Ref: Para. A46)

(a)                Whether the identified related party relationships and transactions have been appropriately accounted for and disclosed in accordance with the applicable financial reporting framework; and  (Ref: Para. A47)

(b)                Whether the effects of the related party relationships and transactions:

(i)                 Prevent the financial report from achieving fair presentation (for fair presentation frameworks); or

(ii)               Cause the financial report to be misleading (for compliance frameworks).

Written Representations

26.               Where the applicable financial reporting framework establishes related party requirements, the auditor shall obtain written representations from management and, where appropriate, those charged with governance that:  (Ref: Para. A48‑A49)

(a)                They have disclosed to the auditor the identity of the entity's related parties and all the related party relationships and transactions of which they are aware; and

(b)                They have appropriately accounted for and disclosed such relationships and transactions in accordance with the requirements of the framework.

Communication with Those Charged with Governance

27.               Unless all of those charged with governance are involved in managing the entity,[13] the auditor shall communicate with those charged with governance significant matters arising during the audit in connection with the entity's related parties.  (Ref: Para. A50)

Reporting Considerations

Aus 27.1 If the auditor is unable to:

(a) obtain sufficient appropriate audit evidence regarding related parties and related party transactions; or

(b) form a conclusion as to the completeness of the disclosure of related party relationships and transactions in accordance with the applicable financial reporting framework;

the auditor shall modify the auditor's opinion in accordance with ASA 705.

Aus 27.2 If the auditor concludes that the related party disclosures in the financial report do