Generally, auditors assess inherent risk as moderate for related party transactions because they expect clients to be aware of their scrutiny of such transactions.

Question

Quizplus · Accepted Answer

Generally, auditors assess inherent risk as high for related party transactions because they involve a higher risk of material misstatement due to the potential for bias or conflict of interest. The fact that clients are aware of the scrutiny of such transactions does not necessarily reduce the inherent risk.

Generally, Auditors Assess Inherent Risk as Moderate for Related Party