A parent company sells goods to non-affiliated company B at the agreed price, and company B sells the goods back to A's wholly-owned subsidiary at the same price.

According to the Accounting Standards-Disclosure of Related Party Relations and Transactions, Company A should not offset its business, provided that Company B is a non-related party from any angle.

But if you are an auditor, you should be very vigilant, because this practice is likely to have fraudulent intentions.

You should reconsider whether the previous audit procedures are effective, especially the procedures for identifying related parties, to see if there are any omissions that lead to the omissions of Company B, such as further understanding of the information of Company B and the transaction status with Company A, etc. Because of this arrangement, Company A has nothing to do with Company B, which is basically impossible.

In addition, we must communicate with the management and the management in writing on this matter and obtain a written statement from the management. Management can admit that it is the best way, and it can also avoid considering the increase in workload caused by fraud.

If the impact on the transaction amount is particularly significant, and after carrying out the above-mentioned series of procedures, it is still impossible to obtain exact evidence to dispel doubts (this kind of thing is really not easy to arouse doubts), we must consider the type of audit opinion or terminate the business more seriously.