In auditing mergers and acquisitions, the auditor:
A) first understands whether a pooling of interest method is allowed.
B) first reads the agreement between the parties to understand the transaction.
C) first determines of the event is material or not.
D) All of the above.

Question

Quizplus · Accepted Answer

The first step for an auditor in auditing mergers and acquisitions is to read the agreement between the parties to understand the transaction. This helps the auditor to determine the accounting method to be used and also to identify the risks and potential financial impacts of the transaction. Understanding whether a pooling of interest method is allowed and determining the materiality of the event may come after the initial understanding of the transaction.

In Auditing Mergers and Acquisitions, the Auditor