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During the audit of a listed company, the audit team discovers that management has recorded a material transaction with a related party at an amount significantly above market value. Under ISA 550, the auditor should FIRST:

Immediately report the matter to the regulatory authorities Evaluate whether the transaction has been properly disclosed and consider the implications for the risk of material misstatement Resign from the engagement as management lacks integrity Issue a qualified audit opinion without further investigation

Correct Answer:

Evaluate whether the transaction has been properly disclosed and consider the implications for the risk of material misstatement

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