CA Final · Advanced Auditing, Assurance and Professional Ethics · Group Audits
Four auditors are each considering whether they can act as principal auditor of a group. Applying the factors in SA 600 Using the Work of Another Auditor, whose position most clearly supports acceptance as principal auditor?
CA Bhavna is best placed. She audits the major portion, knows the components' business well and faces low misstatement risk in the other auditor's components. The other three have adverse factors, such as an immaterial portion, little knowledge or high risk, with no additional procedures to give significant participation.
- ACA Anil audits a portion that is immaterial to the group, has no knowledge of the components' business, and plans no additional procedures
- BCA Bhavna audits the major portion of group financial information, knows the components' business well, and finds low misstatement risk in the components audited by the other auditorCorrect
- CCA Chetan audits a small portion, has good knowledge of the business, and the other auditor's components carry high risk with no additional procedures planned
- DCA Divya audits a material portion, has little knowledge of the business, and the other auditor's components carry high risk with no additional procedures planned
Explanation
CA Bhavna meets each factor: her own portion is material, her knowledge of the components' business is good, and the risk in the other auditor's components is low. The other three each have at least one adverse factor, such as an immaterial portion, little business knowledge or high risk, with no additional procedures to compensate. Chetan's good knowledge does not offset his small portion and the unaddressed high risk.
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