You are an audit supervisor of a listed company, engaged in manufacturing knitting and weaving

yarns. The company has very sophisticated spinning mills of Ring spinning, Rotor Spinning, Vortex

spinning for a long list of fiber combinations eg Cotton, Polyester Staple Fiber, Viscos, T-400,

Modal, Linen, Wool etc. Sponsors of the company holding 52% shares of the company. The

sponsors have some other initiatives (two separate private limited companies with 100%

shareholding) in Knitting, Home Textiles, Waving for Denim, Shirting etc. These two companies

are the top customers of the spinning company. They are consuming almost 35% of the production

of spinning mills. During the course of your audit, you did not find any disclosure regarding related

party transactions as per IAS 24. Please express your position as a statutory auditor of the listed

company on the following situations;

(a) What are the Related Party Transactions as per IAS 24?

(b) The Managing Director, CFO and Company secretary gets annual benefits of Tk. 3 crore,

Tk. 1.5 crore and Tk. 1.45 crore respectively. It is reported in Financial Statement. What are

the provisions of IAS in this respect?

(c) You communicated to the management in governance the disclosure requirements of

Related Party Issues as per provisions of IAS 24. But they declined to change their financial

statements. What would be your course of actions at this stage?

(d) What would be the best form of your Audit Report in this situation, where management is

not changing financials as per requirement of IAS?

(e) Out of your professional skepticism, you have checked the Accounts Receivables Balance

with the two sister concerns and found that it is overdue for last 12 months and it is almost

75% of Accounts Receivables as on Balance Sheet date and also found that no payment

was made from that companies. What would be audit opinion in this situation?