Page 117 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori
(CNO-SA550.060) Maintaining Alertness for Related Party Information When Reviewing Records or
Documents
Mandatory documents to be inspected by auditor.
External confirmations: For e.g. From Banks, legal counsel or 3 Party.
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Minutes: For e.g., Minutes of meetings of Shareholders
Other records or documents: For e.g., Scheme of restructuring.

Documents which May be inspected by auditor (in the sequence of importance)
Law related:
• Register maintained under Section 189
• Information supplied with regulatory authorities (Say SEBI, SEC, Tax returns)
Contract related:
• Renegotiated contracts
• Contracts not entered in the ordinary course of business.
Shareholder related: Shareholder register.
Director related:
• Director register
• For transactions with directors
▪ Contract with TCWG/ Director/KMP
▪ Life Insurance policies
▪ Pensions plans with directors.
▪ Statement of conflict of interest by directors on various transactions
Professionals:
• Internal audit report
• Invoices and correspondence with professionals
Subsidiary and Associates: See Investment Register.

(CNO-SA550.080) Identification of Previously Unidentified or Undisclosed Related Parties or Significant
Related Party Transactions

What if auditor identifies Information suggesting unidentified or undisclosed RPR or SRPT?
Previously unidentified or undisclosed related party:- Auditor identifies information suggesting previously
unidentified or undisclosed related party relationships or significant related party transactions (SRPT).
1. Confirm: Auditor determines whether underlying circumstances confirm the existence of those
relationships or transactions.
What if auditor confirms existence?
2. Communicate to Other Members: Promptly communicate the relevant information to the other members
of the engagement team.

3. Discuss with Management: Request management to identify all transactions with the newly identified
related parties for further evaluation and inquire why the entity's controls failed to enable the identification or
disclosure of the related party relationships or transactions.

4. Reconsider Risk: Reconsider the risk that other related parties or significant related party transactions may
exist that management has not previously identified or disclosed and perform additional audit procedures as
necessary.

5. Risk of Fraud: If the non-disclosure by management appears intentional (indicative of a risk of material
misstatement due to fraud), evaluate the implications for the audit.

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