The group auditors decide not to refer to the audit of component auditors who audited a subsidiary of the group financial statements.After making inquiries about the component auditors' professional reputation and independence,the group auditor most likely would
A) document in the engagement letter that the group auditors assume no responsibility for the component auditors' work.
B) obtain written permission from the component auditors to omit the reference in the group auditors' report.
C) contact the component auditors' and review the audit programs and working papers pertaining to the subsidiary.
D) add an additional paragraph to the group auditors' report indicating that the subsidiary's financial statements are not material to the consolidated financial statements.

Question

Quizplus · Accepted Answer

The group auditors would contact the component auditors and review their audit programs and working papers to ensure the quality and reliability of the audit work performed on the subsidiary, as they are assuming full responsibility for the audit without making reference to the component auditors.

The Group Auditors Decide Not to Refer to the Audit