XYZ Printers is a medium size printing press with turnover of Rs.100 crore for the financial Year 2015-16. The company buy paper rims for its press from different suppliers. You are the statutory auditor of the company for the year 2015-16 and the management has informed you that the company has bought paper rims from one of the supplier who is related to one of the director of XYZ Printers. What audit evidence do you need to collect for identifying and assessing the risk of material misstatement associated with related party transaction?

Question

Edubabble LLP · Accepted Answer

Prior approval of the audit committee/shareholders for the transactions with the supplier, materiality/ significance of the transactions on company’s financial statements, agreement entered into with the supplier and internal control for the transactions with the supplier.

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