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Question - In reviewing sample items for purchases, an auditor noticed 3 purchases from XYZ Inc. were purchases of the same goods that the client had sold to JK just 4 days before the client's year end. The prices charged in the sale and purchase transactions were equal, but the transactions were not recorded as returned goods.
In order to identify related parties, the auditor made enquiries of management and reviewed the minutes of board of directors' meeting, but had not discovered that XYZ was a related party by these procedures.
Required - Discuss 5 procedures that an auditor would perform on related party transactions.
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