Document ID: chunk:federal_register_of_legislation:F2023C01132:reg:23:p5
Version: federal_register_of_legislation:F2023C01132
Segment Type: reg
Provision Reference: reg 23 (pt 5/23)
Character Range: 20081–23458

so, the type and purpose of the transactions.

14.               The auditor shall enquire of management and others within the entity, and perform other risk assessment procedures considered appropriate, to obtain an understanding of the controls, if any, that management has established to:  (Ref: Para. A15‑A20)

(a)                Identify, account for, and disclose related party relationships and transactions in accordance with the applicable financial reporting framework;

(b)                Authorise and approve significant transactions and arrangements with related parties; and  (Ref: Para. A21)

(c)                Authorise and approve significant transactions and arrangements outside the normal course of business.

Maintaining Alertness for Related Party Information When Reviewing Records or Documents

15.               During the audit, the auditor shall remain alert, when inspecting records or documents, for arrangements or other information that may indicate the existence of related party relationships or transactions that management has not previously identified or disclosed to the auditor.  (Ref: Para. A22‑A23)

    In particular, the auditor shall inspect the following for indications of the existence of related party relationships or transactions that management has not previously identified or disclosed to the auditor:

(a)                Bank and legal confirmations obtained as part of the auditor's procedures;

(b)                Minutes of meetings of shareholders and of those charged with governance; and

(c)                Such other records or documents as the auditor considers necessary in the circumstances of the entity.

16.               If the auditor identifies significant transactions outside the entity's normal course of business when performing the audit procedures required by paragraph 15 of this Auditing Standard or through other audit procedures, the auditor shall enquire of management about: (Ref: Para. A24‑A25)

(a)                The nature of these transactions; and  (Ref: Para. A26)

(b)                Whether related parties could be involved.  (Ref: Para. A27)

Sharing Related Party Information with the Engagement Team

17.               The auditor shall share relevant information obtained about the entity's related parties with the other members of the engagement team.  (Ref: Para. A28)

Identification and Assessment of the Risks of Material Misstatement Associated with Related Party Relationships and Transactions

18.               In meeting the ASA 315 requirement to identify and assess the risks of material misstatement,[9] the auditor shall identify and assess the risks of material misstatement associated with related party relationships and transactions and determine whether any of those risks are significant risks.  In making this determination, the auditor shall treat identified significant related party transactions outside the entity's normal course of business as giving rise to significant risks.

19.               If the auditor identifies fraud risk factors (including circumstances relating to the existence of a related party with dominant influence) when performing the risk assessment procedures and related activities in connection with related parties, the auditor shall consider such information when identifying and assessing the risks of material misstatement