Page 149 - CA Inter Audit PARAM

CA Ravi Taori
4. Statements of conflicts of interest from management and those charged with governance.
5. Records of the entity’s investments and those of its pension plans.
6. Contracts and agreements with key management or those charged with governance.
7. Significant contracts and agreements not in the entity’s ordinary course of business.
8. Specific invoices and correspondence from the entity’s professional advisors.
9. Life insurance policies acquired by the entity.
10. Significant contracts re-negotiated by the entity during the period.
11. Internal auditors’ reports.
12. Documents associated with the entity’s filings with a securities regulator e.g, prospectuses)

Transactions outside normal course of business Old course— (P16M/M16M/M16E/M18M/
QNO #Unique M22E)
550.05

P Ltd. is a company from a business group "ABCD" and is engaged in trading of garments. The promoters of
the company are promoters and directors of some other group companies also. You have been appointed
as an auditor of P Ltd. P Ltd has entered into various inter company transactions (within group companies)
during the year which are outside its normal course of business. What will be your duties as an auditor in
relation to those transactions?
Answer Duties of Auditor in identifying Significant Related Party Transactions: For identified significant related
party transactions outside the P Ltd.’s normal course of business, the auditor shall:

1. Inspect the underlying contracts or agreements, 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;
(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

2. Obtain audit evidence that the transactions have been appropriately authorised and approved.

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