The group engagement partner typically decides to reference the work completed by the component auditor in the audit report _______.
A)when management requests that the audit firm do so
B)when the subsidiary audited by the component auditor is a material amount of the group financial statements
C)when the subsidiary audited by the component auditor is an immaterial amount of the group financial statements
D)when the group auditor requests the inclusion of their firm on the audit report

Question

Quizplus · Accepted Answer

The group engagement partner typically decides to reference the work completed by the component auditor in the audit report when the subsidiary audited by the component auditor is a material amount of the group financial statements. This is because the opinion on the subsidiary's financial statements can impact the overall opinion on the group financial statements, and therefore it is important to disclose the involvement of the component auditor in the audit report. Choices A, C, and D are not necessarily valid reasons for referencing the work of the component auditor in the audit report.

The Group Engagement Partner Typically Decides to Reference the Work