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CS Professional · Compliance Management, Audit and Due Diligence · Audit Engagement

CA Firm Joshi & Co is auditor of both Aarav Holdings Ltd (parent) and its subsidiary Aarav Retail Ltd. The firm is deciding whether to send a separate engagement letter to the subsidiary. Which factor is listed in SA 210 as relevant to that decision?

Whether a separate auditor's report is to be issued on the component is a listed factor. SA 210 also lists who appoints the component auditor, legal appointment requirements, degree of parent ownership, and the component management's independence from the parent.

  1. AThe size of the audit firm's partnership
  2. BWhether a separate auditor's report is to be issued on the componentCorrect
  3. CThe month in which the financial year ends
  4. DThe number of branches of the parent entity

Explanation

SA 210 lists factors: who appoints the component auditor, whether a separate auditor's report is issued on the component, legal requirements on audit appointments, degree of parent ownership, and independence of component management from the parent. Firm size, year end month and branch count are not listed.

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