An independent auditor finds that Hollow Pty Ltd occupies office space, at no charge, in an office building owned by a shareholder of Hollow Pty Ltd. This finding indicates the existence of:

Question

Quizplus · Accepted Answer

The finding of Hollow Pty Ltd occupying office space, at no charge, in an office building owned by a shareholder of the company indicates the existence of related-party transactions. Related-party transactions can be a potential red flag for financial statement auditors, as they can be used to manipulate financial statements and deceive stakeholders. It is important for auditors to carefully scrutinize related-party transactions to ensure they are arm's length and in compliance with accounting standards.

An Independent Auditor Finds That Hollow Pty Ltd Occupies Office