Gaps in Related Party Transactions Compliance Highlighted in NFRA’s Inspection of Two Audit Firms

The National Financial Reporting Authority (NFRA) conducted a 2023 audit inspection of Price Waterhouse Chartered Accountants LLP (PWCA) and Price Waterhouse & Co Chartered Accountants LLP (PW & Co CA) to assess compliance with auditing standards. The review focused on internal financial controls, related party transactions (RPTs), and asset impairment assessments.

A key concern was deficiencies in RPT verification, where auditors lacked sufficient documentation to support arm’s length pricing. Testing was limited to pricing comparisons without assessing contract terms, guarantees, or bad debt provisions. Compliance with board meeting disclosure rules was also inadequate.

NFRA has called for stronger audit procedures, better documentation, and stricter compliance measures. The firms have acknowledged the findings and committed to corrective actions.

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