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Generally, related party transactions (RPTs) can enhance the efficiency of firm's business operations. However, the increase in financial scandals involving RPTs proves that these transactions could potentially be used as a tool by stakeholders to extract firm's wealth. Due to the potential abuse, RPTs are a challenge to the audit work. Therefore, auditors are exposed to audit risk and need to devote time and effort to performing audit work. The risks and difficulties in audit works are often associated with increased audit fees. Therefore, the objective of this study is to examine the relationship between RPTs and audit fees in Malaysia. Specifically, this study classifies RPTs based on their complexity and type of related parties which includes complex RPTs or simple RPTs and effective RPTs or conflict RPTs. This study employs a total of 583 firms listed on Bursa Malaysia from 2013 to 2017. The findings suggest that complex RPT, simple RPT and effective RPT have positive and significant relationships with audit fees. These findings support agency theory that RPTs increase audit risks and audit efforts. This study provides insights for financial statement preparers to the potential risks of financial misstatement arising from RPTs. Auditors need to understand the importance for each type of RPTs in order to make an appropriate audit judgement and procedures. [ABSTRACT FROM AUTHOR]