AC410-01_Unit 8_Project_Marjorie Bowden

AC410-01_Unit 8_Project_Marjorie Bowden - equally exclusive...

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AC410-01 Unit 8 Project Marjorie Bowden 14-39 a. Related entity transactions are defined as transactions between a corporation or owners  of a corporation and another corporation or owners that are associated with the former  corporation. Affiliation is usually established by the percentage of ownership between  corporations and their owners.   While related-entity transactions typically come under  scrutiny, they are allowed in most circumstances. However, when they occur, they must  be approved by the Board of Directors, approved by auditors, and disclosed to the  public.  While these rules apply especially to public companies, they can also have  implications for private companies. For example, private companies engaging in related- entity transactions will be examined by lenders and investors.   b. From the auditor’s standpoint, related-party transactions have two distinct, but not 
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Unformatted text preview: equally exclusive, aspects: adequate disclosure and fraud detection. Some related-party transactions may be the direct result of the relationship. Without that relationship, the transaction might not have occurred at all or might have had significantly different terms. Therefore, disclosure of the nature and amount of transactions of related parties is necessary for the proper understanding of the financial statements. Insufficient disclosures of related-party transactions may result in misleading information in financial statements, and the auditor should be concerned with identifying these transactions while completing the audit and evaluating the sufficiency of disclosure of them. 14-43 a. a defense that is based on evidence adequate to warrant setting aside a default judgment against the defendant in civil litigation b. guarantee debts of others c. litigation and claims...
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This note was uploaded on 08/23/2011 for the course ACC 302 taught by Professor Peoples during the Spring '11 term at Kaplan University.

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