In addition to the corporate governance weakness identified in olympus case study (a) were there red flags that the auditors should have pursued? What routine audit procedures might have led the auditors to detect and investigate these schemes?

Olympus acted as a guarantor of loans made by the banks to CFC and QP by depositing funds at the banks equal to the amount loaned. Do you think this creates a related-party relationship? Review the auditing standards pertaining to related parties. Why are transactions with related parties subject to particular scrutiny?