Which of the Following Statements Regarding Using the Work of Another

question 12

Multiple Choice

Which of the following statements regarding using the work of another auditor is ?

• A)The group engagement partner will spend more time reviewing the component auditor's work if the component auditor has a good reputation
• B)The group engagement partner will spend less time reviewing the component auditor's work when the component is at risk of material misstatement
• C)The component auditor sets out the work to be conducted by the group engagement partner
• D)The group engagement partner will spend more time reviewing the component auditor's work when the component is at risk of material misstatement

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Definitions:

Merger

Agreement in which two or more firms combine to form one company.

Acquisition

Agreement in which one company purchases another.

Leverage

Increasing the rate of return on funds invested by borrowing funds.

Return

The gain or loss on an investment over a specified period, expressed as a percentage of the investment’s cost.