Auditing related party transactions: A literature overview and research synthesis

Elizabeth A. Gordon, Elaine Henry, Timothy J. Louwers, Brad J. Reed

Research output: Contribution to journalArticlepeer-review

78 Scopus citations

Abstract

We examine research relevant to auditing related party transactions to contribute to the PCAOB project on this topic and to provide other policy makers, auditors, and academics with an overview of relevant literature. Specifically, we report on the challenges associated with the identification, examination, and disclosure of related party transactions. Additionally, we address issues and research evidence related to nondisclosure and reliance on management assertions, risk assessment, materiality, fraud detection, the effect of related party transactions on corporate governance, and international auditing issues. Overall, we believe that the findings in academic research and the significance of related party transactions in recent prominent fraud cases are consistent with the PCAOB's reconsideration of auditing of related party transactions. We conclude with implications for further research.

Original languageEnglish
Pages (from-to)81-102
Number of pages22
JournalAccounting Horizons
Volume21
Issue number1
DOIs
StatePublished - Mar 2007

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