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Brandon is working on the audit of Michum Inc. In accordance with CAS 550 (related parties), Brandon ...

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Brandon is working on the audit of Michum Inc. In accordance with CAS 550 (related parties), Brandon ...

Brandon is working on the audit of Michum Inc. In accordance with CAS 550 (related parties), Brandon had obtained a management confirmation of all related-party transactions. When auditing the purchasing cycle of Michum, Brandon found that the company had purchased over $500,000 of merchandise from Elite Crust Inc., a company that is owned by the CEO's brother. The $500,000 purchase is a material amount and it was not included in the confirmation provided by Michum. Brandon should
A) inform the audit committee.
B) qualify the audit report.
C) discuss this issue with the management of Michum.
D) reduce materiality to increase the likelihood of discovering other undisclosed related party transactions.

Textbook

Auditing: The Art and Science of Assurance Engagements, Canadian Edition

Edition: 12^th

Authors: Arens, Elder, Beasley, Splettstoesser

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Auditing: The Art and Science of Assurance Engagements, Twelfth Canadian Edition, 12/E (Arens, Elder, Beasley, Splettstoesser)

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