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Hello Mike
whenever we have related party transactions then the standard requires us to disclose the transaction plus the nature of the relationship and any other contractual terms. however what happens if the transaction is not at arms length?
i understand that the audit procedures in that case should be to investigate the authorisation of such transactions and whether or not it has been disclosed properly in financial statement notes.
however does it matter if the transaction is not at arms length? i mean will this have no implications for the audit report if the management in this case discloses everything in the notes?
“however what happens if the transaction is not at arms length?”
All the more reason for disclosing the full details!
If it’s all fully and transparently disclosed, then no implication for the opinion unless it’s worthy of an emphasis of matter paragraph
Alternatively it could have been a KAM in which case no Emphasis of Matter
Hope that helps
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