The Group Auditors Decide Not to Refer to the Audit

question 88

Multiple Choice

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.

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Definitions:

ESOs

Employee Stock Options; the right granted to employees to buy a set amount of company shares at a fixed price.

Job Leaving

This refers to the act of an employee voluntarily terminating their employment with a company.

American Call Option

An option contract that allows the holder to buy an asset at a specific price before or at the expiration of the option.

Expiration Date

In finance, it typically refers to the last day on which options or futures contracts are valid.