Research On Audit Risk Of Related Party Relationships And Transactions

As the organization forms and management mode of companies and enterprisesdevelops day by day in the world, the related party relationships and transactionsemerges. Since the price of related transactions can be determined through mutualnegotiation of the related party, the related transactions may be a means to regulate theprofit or evade payment of duty for some organization or individual to seek the gain.Nowadays, many listed companies at home and abroad take advantage of thecomplicated related party relationships to make related transactions frequently. InChina, a lot of listed companies and the holding shareholders take advantage of unfairrelated transactions to boast their performance or manipulate the profit, which hasjeopardized the profits of medium or small investors. The emergence of the relatedparty relationships and transactions brings a new difficulty to audit. The uncleardefinition of related party relationships and unusual related transactions make auditmore difficult and add the audit risk of the CPA at the same time. So what's themeaning of audit risk of related transactions? What are the key factors to influence theaudit risk of related transactions? What measures or process can be adopted to shunthe audit risk? How to improve the related transactions auditing environment byimproving the system? This article expounds and analyzes the above questions in fiveparts:Part One is Introduction. This part mainly expounds the background, significanceof the subject and the current research status abroad and at home about relative topic.Part Two theoretically analyzes and defines the relationship and transactionamong the related parties, explains the characters of the related transactions.Part Three expounds the audit risk about the related transactions. This part beginswith the exposition of the basic theory of audit risk. Then it concludes theimplication and forming elements of the audit risk.Part Four expounds how to shun the audit risk. This part is the key part in thisarticle with several new concepts. In this part, it forwards the auditing process andmethods of the related transactions in the light of the current status of the relatedtransactions in China. Also, it expounds how to standardize the related transactionsand shun the audit risk about the transactions in terms of system construction.Part Five concludes the whole part.