Question 3When component auditors are involved in the audit of group financial statements the group auditors may issue a report that: Refers to the component auditors, describes the extent of the component auditor's work and expresses an unqualified opinion. Does not consider or evaluate the component auditor's work but express an unqualified opinion in a standard report. Places primary responsibility for the reporting on the component auditors. Names the component auditors, describes their work and presents only the group auditors report.

Component auditor means an auditor appointed for the branch or subsidiary company in the group company. In an audit of group financial statements, the principal auditor should consider the report of the component auditor in the preparation of the audit report on the group companies. The principal auditor will consider the relevant qualifications of the component auditor before considering the report prepared by component auditor. The principal auditor will report in the group auditor's report the extent of the component auditor used in the group auditor's report and expresses an unmodified opinion. Thus, the correct option is option-1st - Refers to the component auditors, describes the extent of the component auditor's work and expresses an unqualified opinion.

Answered: When component auditors are involved in…

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter5: Professional Auditing Standards And The Audit Opinion Formulation Process

Section: Chapter Questions

Problem 9CYBK

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Question 3

When component auditors are involved in the audit of group financial statements the group auditors may issue a report that:

		Refers to the component auditors, describes the extent of the component auditor's work and expresses an unqualified opinion.
		Does not consider or evaluate the component auditor's work but express an unqualified opinion in a standard report.
		Places primary responsibility for the reporting on the component auditors.
		Names the component auditors, describes their work and presents only the group auditors report.

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