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Which of the following procedures would the group auditor most likely perform after deciding to make reference to a component auditor who audited a subsidiary of the reporting entity?
A. Review the audit documentation and the audit programs of the component auditor.
B. Visit the component auditor and discuss the results of the other CPA’s audit procedures.
C. Make inquiries about the professional reputation and independence of the component auditor.
D. Determine that the component auditor has a su²cient understanding of the subsidiary’s internal control

The correct answer is C. However, I don’t understand why A and D are not correct. I am wondering the group auditor does not even need to review component auditor’s work?

Fight!

[SchruteBeet]

When the group auditor makes a reference to a component auditor, he/she is relying on the component auditor's audit for sufficient appropriate evidence. In such a case, the group auditor wouldn't want to spend a lot of time going through the component auditor's audit documentation and audit programs (this is only done when the group auditor is taking responsibility for the component auditor's work and does not make a reference in their report) but would rather want to look into the component auditor's reputation, professional competence, and independence. This will give the group auditor satisfaction to a great degree, that the auditor they are referencing to, is credible.

AUD - 79
BEC - 80
FAR - 83
REG - 78

Ethics - 97

"If it were easy, everyone would do it."

"Hard work, perseverance, faith, blessings."

[Author]

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