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CA Final · Advanced Auditing, Assurance and Professional Ethics · Group Audits

CA Vikram has been appointed auditor of Ganga Pharma Ltd. and has never visited its two subsidiary components, which another auditor audits. Which statement correctly reflects SA 600 on this point?

His degree of knowledge of the business of the components is a factor he must consider in deciding whether he can act as principal auditor. The qualification of the other auditor does not remove this consideration, and it applies at the acceptance stage, not only after signing or for foreign components.

  1. AHis degree of knowledge of the business of the components is a factor to consider when deciding whether he can act as principal auditorCorrect
  2. BKnowledge of the components' business is irrelevant if the other auditor is a Chartered Accountant
  3. CKnowledge of the business is needed only after the audit report has been signed
  4. DKnowledge of the business matters only if the components are located outside India

Explanation

The principal auditor's degree of knowledge regarding the business of the components is one of the listed considerations for acceptance as principal auditor. It is assessed at the acceptance stage, not after signing. It is not limited to foreign components and is not waived because the other auditor is a CA.

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