When component auditors are involved in the audit of group financial statements,the group auditors are required to
A)Consider the independence and professional reputation of the component auditors in deciding how to utilize their work.
B)Identify the extent of component auditors' involvement if they choose not to rely on the component auditors' work.
C)Identify the component auditors by name in their report to appropriate limit their liability for the component auditors' work.
D)Disclaim an opinion on the portion of the financial statements examined by the component auditors.

Question

Quizplus · Accepted Answer

When component auditors are involved in the audit of group financial statements, the group auditors are required to consider the independence and professional reputation of the component auditors in deciding how to utilize their work. This is because the group auditors rely on the work of the component auditors in forming their opinion on the financial statements, and it is important to ensure that the component auditors were independent and competent in their work. Therefore, option A is the best choice. Option B is incorrect because the group auditors must identify the extent of component auditors' involvement if they choose to rely on their work, not if they choose not to rely on it. Option C is also incorrect because identifying the component auditors by name in the report would not limit the group auditors' liability for their work. Option D is incorrect because the group auditors are required to form an opinion on the financial statements as a whole, including the work of the component auditors.

When Component Auditors Are Involved in the Audit of Group