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IRBA issues Staff Audit Practice Alert 5: The Auditor's Considerations with respect to Transaction that are not at Arm's Length
- 08 July 2020
- Accounting
- South African Accounting Academy
Transactions that are not at arm's length may pose risks in an audit of the financial statements, because if such transactions are not identified by management and/or the auditor it could give rise to risks that are not addressed in the audit, and ultimately in misstatements in the financial statements.
The perpetration of fraud, causing material misstatements in the financial statements and/or non-compliance with laws and regulations, has become more prevalent at entities in South Africa over the past few years. Registered auditors are required to be alert to the possibility of fraud thereby enabling them to respond appropriately. Due to this prevalence, auditors have thus called for guidance regarding the auditor's considerations with respect to transactions that are not at arm's length. Consequently, the IRBA has responded to the call.
Click here to download the 17-page Alert.