We examine research relevant to auditing related party transactions to contribute to the PCAOB project on this topic and to provide other policy makers, auditors, and academics with an overview of relevant literature. Specifically, we report on the challenges associated with the identification, examination, and disclosure of related party transactions. Additionally, we address issues and research evidence related to nondisclosure and reliance on management assertions, risk assessment, materiality, fraud detection, the effect of related party transactions on corporate governance, and international auditing issues. Overall, we believe that the findings in academic research and the significance of related party transactions in recent prominent fraud cases are consistent with the PCAOB's reconsideration of auditing of related party transactions. We conclude with implications for further research.
Auditing Related Party Transactions: A Literature Overview and Research Synthesis
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Elizabeth A. Gordon, Elaine Henry, Timothy J. Louwers, Brad J. Reed; Auditing Related Party Transactions: A Literature Overview and Research Synthesis. Accounting Horizons 1 March 2007; 21 (1): 81–102. doi: https://doi.org/10.2308/acch.2007.21.1.81
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