Auditing and EthicsQuestion 5658 of 212
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7. Do you agree with all the ways suggested by CA Z to CA F?

Options

ANo, suggestion (i) is not correct
BNo, suggestion (ii) is not correct AUDITING AND ETHICS
CNo, suggestion (iii) is not correct
DNo, suggestion (iv) is not correct (2 Marks)
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Correct Answer

Option CNo, suggestion (iii) is not correct

All Options:

  • ANo, suggestion (i) is not correct
  • BNo, suggestion (ii) is not correct AUDITING AND ETHICS
  • CNo, suggestion (iii) is not correct
  • DNo, suggestion (iv) is not correct (2 Marks)

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Detailed Solution & Explanation

Under SA 550, "Related Parties", the auditor is required to inspect records and documents to identify the existence of related party relationships and transactions.
These records include:
1. Information supplied by the entity to regulatory authorities.
2. Entity's income tax returns.
3. Life insurance policies acquired by the entity.
Inventory records maintained by the entity (Suggestion iii) do not contain information regarding related party relationships.
Hence, **Option C** is the correct answer.

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