Question

You are an auditor and you discover during a conversation with a key employee that a significant volume of transactions is with a vendor owned by the spouse of a member of the management team. Which of the following specific audit procedures would least likely be helpful?

1) Review conflict of interest statements from management.
2) Obtain a list of related parties from management.
3) Review contracts and other agreements.
4) Review life insurance policies purchased by the entity.

Answer 1

The least helpful audit procedure would be to review life insurance policies purchased by the entity.

Step-by-step explanation:

The specific audit procedure that would least likely be helpful in this situation is to review life insurance policies purchased by the entity. This procedure is unrelated to the issue at hand, which is the significant volume of transactions with a vendor owned by the spouse of a member of the management team.

Reviewing conflict of interest statements from management would be helpful to determine if they disclose any relevant information about the vendor. Obtaining a list of related parties from management would also be useful in identifying any potential conflicts of interest. Reviewing contracts and other agreements would provide additional insight into the nature and terms of the transactions with the vendor.