CA Final · Advanced Auditing, Assurance and Professional Ethics · Group Audits
CA Meera is appointed auditor of Himalaya Foods Ltd. She will personally audit only a small part of the financial information. She has little knowledge of the business of the components, and the components audited by another auditor carry a high risk of material misstatement. What is the correct approach under SA 600?
She should consider whether her own participation is sufficient to act as principal auditor. She weighs the materiality of the portion she audits, her knowledge of the components' business, the risk of misstatement in the other auditor's components, and whether additional procedures give her significant participation. Appointment alone or the other auditor's reputation does not settle it.
- AShe is automatically the principal auditor because the company appointed her
- BShe should consider whether her own participation is sufficient to act as principal auditor, weighing the listed factors including additional procedures she can performCorrect
- CShe may rely on the other auditor's reputation and accept the role without further consideration
- DShe must refuse the engagement solely because another auditor is involved
Explanation
The auditor must consider whether her own participation is sufficient. For this she weighs the materiality of her portion, her knowledge of the components' business, the risk of misstatement in the other auditor's components, and additional procedures that give significant participation. Automatic acceptance or automatic refusal ignores this assessment.
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