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The auditor identifies a related party not disclosed by management. Under SA 550, the auditor should:
ACommunicate to other engagement team members, evaluate why management did not identify it, and consider implications for management's reliability
BSign the report unchanged
CReplace management
DBypass TCWG
Answer & Solution
Correct answer: A. Communicate to other engagement team members, evaluate why management did not identify it, and consider implications for management's reliability
1. SA 550.22 requires team communication and reassessment of management integrity.
2. Undisclosed related parties signal control weakness or fraud risk.
3. Reporting unchanged, replacing management, or bypassing TCWG are inappropriate.
_Source: ICAI BoS CA Final Paper 3, Ch 2 "Audit Planning Strategy and Execution"_
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