Auditing Cases 6th Edition by Mark Beasley,Frank Buckless,Steven Glover,Douglas Prawitt

Exercise 2

The following requirements relate to Ms. Stitt's testimony about the CanWest non-compete payments:
[a] The concept of a "related party" is defined by generally accepted accounting principles (GAAP). Review the FASB's Accounting Standards Codification (ASC) and determine where guidance for related parties in contained in accounting standards.
[b] Provide a brief overview of the accounting standards' definition of "related party transactions."
[c] What are the primary accounting requirements for related parties described in the ASC What types of information should be included in financial statements
[d] Based on your understanding of the concept of "related party transactions," why would the non-compete payments described in this case be considered a "related party transaction"
In June 2014, the PCAOB issued Auditing Standard No. 18, Related Parties. Visit the PCAOB's website (www.pvcaob.org) and locate PCAOB Release No. 2014-002 issued on June 10, 2014 to answer the following questions:
[e] What three critical areas are the subject of this new standard and why did the PCAOB decide those areas should addressed in this new standard
[f] Summarize the primary auditor responsibilities in the PCAOB's AS 18 regarding the auditor's responsibilities with respect to identifying related party relationships and transactions.