Related party transactions and audit risk

Related Party Transactions (RPTs) are perceived as genuine transactions, which fulfill the economic needs of a company. However, controlling shareholders may use RPTs tool for transferring firm’s resources their private benefit. The dual effect RPTs, i.e., transaction efficiency and conflict interest between minority shareholders, increase audit risk result, increases fee. Companies Act, 2013, Clause 49 SEBI listing agreement mandate arm’s length principle pricing RPTs. there situations in regulations silent about method pricing, this auditors auditing This study intends to examine relationship India, based on sample 1,182 firms covering period from 31 March 2011 2018. Panel data methodology has been applied empirical analysis results show that higher fee is an indication resource prove instead reducing complexity associated with new result risk.