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If the company fails to disclose related party transactions, what type of audit opinion should be issued?

Since U.S. GAAP requires a company to disclose every related party transaction (regardless of materiality), if the company doesn’t adequately disclose the transactions, then that represents a departure from GAAP.

If the issue is material and pervasive, then the audit team should issue an adverse opinion, but if the issue is only material, then a qualified opinion will likely be issued.


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