The Group Auditors Decide Not to Refer to the Audit

question 39

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:

Units

Represents a measure of quantity or volume, often used in production, inventory, or accounting contexts.

Manufacturing Overhead

refers to indirect factory-related costs incurred when producing a product, which can include costs related to the maintenance and operation of the factory.

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity, allowing more accurate budgeting in variable cost situations.

Units

A quantifiable measure used in manufacturing, inventory, and other sectors, referring to the individual or standardized quantity of a product or material.