Sir, as per SA 550, when there is assertion about transaction with related party in FS by Manangement, auditor needs to obtain evidence about the arm’s length nature of the transaction. Suppose transfer pricing audit is done by other than statutory auditors of the company. So, in this case which SA will be applicable? SA 600(other auditor, eg.branch) or SA 620(auditor’s expert). What std to be used for reporting by statutory auditor for transfer pricing audit done by other auditor? In case such question is asked which will be a more appropriate std to mention?

Questions › Category: SA-550 › Sir, as per SA 550, when there is assertion about transaction with related party in FS by Manangement, auditor needs to obtain evidence about the arm’s length nature of the transaction. Suppose transfer pricing audit is done by other than statutory auditors of the company. So, in this case which SA will be applicable? SA 600(other auditor, eg.branch) or SA 620(auditor’s expert). What std to be used for reporting by statutory auditor for transfer pricing audit done by other auditor? In case such question is asked which will be a more appropriate std to mention?

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pranali ved asked 7 years ago

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Ravi Staff answered 7 years ago

From SA 600
“Other auditor” means an auditor, other than the principal auditor, with responsibility for reporting on the financial information of a component which is included in the financial information audited by the principal auditor.
“Component” means a division, branch, subsidiary, joint venture, associated enterprises or other entity whose financial information is included in the financial information audited by the principal auditor.
So SA 600 is not relevant
Further he is not expert appointed by auditor so SA 620 not relevant,and he is not expert appointed to help in accounting process so he is not management expert SA 500 not relevant
he is simply not covered any of the standards, using his report is simply using work any other professional, not covered by SAs show diligence, before relying on his work