Document ID: chunk:federal_register_of_legislation:F2023C01132:reg:23:p11
Version: federal_register_of_legislation:F2023C01132
Segment Type: reg
Provision Reference: reg 23 (pt 11/23)
Character Range: 38160–41287

supplied by management with the auditor's record of related parties noted in previous audits.

A12.         However, where the framework does not establish related party requirements, the entity may not have such information systems in place.  Under such circumstances, it is possible that management may not be aware of the existence of all related parties.  Nevertheless, the requirement to make the enquiries specified by paragraph 13 still applies because management may be aware of parties that meet the related party definition set out in this Auditing Standard.  In such a case, however, the auditor's enquiries regarding the identity of the entity's related parties are likely to form part of the auditor's risk assessment procedures and related activities performed in accordance with ASA 315 to obtain information regarding the entity's organisational structure, ownership, governance and business model.

    In the particular case of common control relationships, as management is more likely to be aware of such relationships if they have economic significance to the entity, the auditor's enquiries are likely to be more effective if they are focused on whether parties with which the entity engages in significant transactions, or shares resources to a significant degree, are related parties.

A13.         In the context of a group audit, ASA 600 requires the group auditor to request component auditors to communicate on a timely basis related party relationships not previously identified by group management or the group auditor.[19]  Such information provides a useful basis for the group auditor's enquiries of management regarding the identity of related parties.

A14.         The auditor may also obtain some information regarding the identity of the entity's related parties through enquiries of management during the engagement acceptance or continuance process.

The Entity's Controls over Related Party Relationships and Transactions (Ref: Para. 14)

A15.         Others within the entity are those considered likely to have knowledge of the entity's related party relationships and transactions, and the entity's controls over such relationships and transactions.  These may include, to the extent that they do not form part of management:

           * Those charged with governance;

           * Personnel in a position to initiate, process, or record transactions that are both significant and outside the entity's normal course of business, and those who supervise or monitor such personnel;

           * The internal audit function;

           * In‑house legal counsel; and

           * The chief ethics officer or equivalent person.

A16.         The audit is conducted on the premise that management and, where appropriate, those charged with governance have acknowledged and understand that they have responsibility for the preparation of the financial report in accordance with the applicable financial reporting framework, including where relevant their fair presentation, and for such internal control as management and, where appropriate, those charged with governance determine is