Tutorial Corporate Governance R$4\mathrm{.}8$ Why is it important to maintain professional skeptiscism when gaining an understanding of related part transactions? AP$4\mathrm{.}7.($LO $4)$ Understanding related party transactions During the risk assessment phase for a new client, you have been assigned the task of identifying related parties. You need to refresh your memory regarding why identifying related parties is necessary in the audit. Required Answer the following questions: a$)$ What is an $$arm$\text{'}$s$-$length transaction$$ as defined by the standard? b$)$ Identify examples of how related party relationships and transactions may give rise to higher risks of material misstatement than transactions with unrelated parties.