Question

If the group engagement partner wants to name the component audit firm, then_______.

A) He/she must receive permission from the component auditor, and the component auditor's report on the subsidiary must be presented together with the auditor's report on the group financial statements
B) He/she must receive permission from the component auditor, and the prior auditor's report on the subsidiary must be presented together with the auditor's report on the group financial statements
C) He or she is free to do so
D) Management must provide permission accordingly.

Answer 1

If the group engagement partner wants to name the component audit firm, then He/she must receive permission from the component auditor, and the component auditor's report on the subsidiary must be presented together with the auditor's report on the group financial statements. Option A

Step-by-step explanation:

If the group engagement partner wants to name the component audit firm, then the correct answer is A) He/she must receive permission from the component auditor, and the component auditor's report on the subsidiary must be presented together with the auditor's report on the group financial statements.

This is because the group engagement partner can only refer to the work of the component auditor in their report if certain criteria are met. These criteria often include receiving permission from the component auditor to reference their work and to ensure that the information provided is understood in the proper context, hence the requirement for accompanying reports.

It is important to note that referring to another auditor's work should be done with care to avoid any misunderstanding about the division of responsibility concerning the audit work done. Option A