TITLE:
Risks of Related Parties in Transition Economy—An Audit Approach
AUTHORS:
Elena Dobre
KEYWORDS:
Related Party Transactions, Internal Control Deficiency, Professional Skepticism
JOURNAL NAME:
Open Journal of Accounting,
Vol.6 No.3,
July
17,
2017
ABSTRACT: This paper aims at improving audit practices, at least, for our national audit
practitioners. Such possibilities are discussed as case study regarding an audit
of a public entity as a related party (relationship & transactions) with a private
company. This reveals a fraud risk by periodical re-negotiating of significant
contracts combined with internal controls deficiency. In order to avoid and
remove such bad practices, the Romanian financial auditors, fraud examiners,
taxation consultants and even legal advisers, need rigorous learning and professional
development and adequate evaluation frameworks, combining in a
competent responsible manner quantitative and qualitative evaluation made
by a peer-review schema. Exclusive quantitative approaches are not adequate
for a correct evaluation. An efficient evaluation must involve human specialists,
including financial auditor’s colleagues. The results for entire professional
body may result in higher quality judgments and a good assimilation; not only
good practice international standards, but even entire experience of practitioners
in this field was recommended. Emphasizing of professional skepticism
arises with enough experience.