How to audit of inter division transfer

• Review Transfer Pricing Policy of the organisation.Check approvals for it.
• Now check the accounting Entries.There should be consistency.Inquire about reversals.Check for due payments.
• Ask details and reasons for unsettled amounts.
• Check the rates and quantities of the transfer.Compare it with Market Price. If there is big difference, point it out and ask reasons for such a policy.
• Check Reconciliation between the two divisions.Any difference should be accounted and should reflect in Trial Balance.

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