Final answer:
The correct type of auditor that performs audits of a component or subsidiary of the parent company is known as a Component auditor. They are responsible for analyzing the financial statements of separate divisions or subsidiaries to ensure accurate reporting in the parent entity's consolidated financials.
Step-by-step explanation:
The type of auditors that perform audits of a component or subsidiary of the parent company is referred to as a Component auditor. These auditors specialize in analyzing the financial statements and operations of specific divisions, units, or subsidiaries that are part of a larger entity. They play a crucial role in ensuring that the financial information from each component is accurately reported in the consolidated financial statements of the parent entity. These auditors need to be familiar with the business and operational practices of the component they are auditing, as well as the relevant financial reporting standards.
When conducting the audit of a subsidiary, which is a separate legal entity but owned by a parent company, the auditors are focused on verifying the accuracy of financial records and compliance with accounting standards. This is done to assure the parent company, stakeholders, and potential investors that the subsidiary's financial statements fairly represent its financial position and results of operations. A Subsidiary auditor may also be used in this capacity interchangeably with a Component auditor. The mentioned correct option in the final answer for the given question is A. Component auditor.