An Auditor Searching for Related-Party Transactions Should Obtain an Understanding

Multiple Choice

An auditor searching for related-party transactions should obtain an understanding of each subsidiary's relationship to the total entity because:

A) intercompany transactions may have been consummated on terms equivalent to arm's length transactions.
B) this might reveal whether particular transactions would have taken place if the parties had not been related.
C) the business structure may be deliberately designed to obscure related-party transactions.
D) this might permit the audit of intercompany account balances to be performed as of concurrent dates.