- Joined
- Oct 7, 2009
- Messages
- 5,494
- Points
- 0
If org chart, rpt records not given to auditors, auditors will have to highlight the issue in the letter to mgt (therefore there should be some form of evidence), to reduce audit risk. Nevermind, as long as the quality of work by audit has been assessed.
I understand your point and did reply to post 520 originally.
It's not clear whether the auditors knew whether those were RPT or not. Also not clear whether CHC or KH disclosed, although it's likely that they didn't and that is now one of the issues being addressed.
The management are expected to disclose the RPT, as well as provide a comprehensive and complete org chart. The auditors will then usually verify and substantiate this information provided. If the management don't provide such information, the main way of getting evidence of RPT would be to cross check all organizations having dealings with the audited organization, including checking the company secretaral records for evidence of ownership/shareholding/control.
The auditors may not do this last step unless they have reason to believe that there is RPT among them, because there could be hundreds or thousands of organizations having transactions with the organization being audited. They will usually rely on information/representation by the management and substantiate what is provided.