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

Kaveri Auditors is considering acting as principal auditor of Deccan Agro Ltd. It audits the parent and two components, while another auditor audits a remote component. Kaveri has never visited the remote component's business and has no knowledge of its operations. Which factor, listed in SA 600, is directly raised by this fact?

The relevant factor is the principal auditor's degree of knowledge regarding the business of the components. SA 600 requires the auditor to weigh this when deciding whether its own participation is sufficient to act as principal auditor, and Kaveri's unfamiliarity with the remote component weakens its position.

  1. AThe principal auditor's degree of knowledge regarding the business of the componentsCorrect
  2. BThe effective date of SA 600 for the engagement
  3. CThe compatibility of SA 600 with ISA 600
  4. DThe fee charged by the other auditor

Explanation

SA 600 lists the principal auditor's degree of knowledge regarding the business of the components as a consideration in deciding whether its participation is sufficient. Kaveri's lack of knowledge of the remote component bears directly on this. The other options are not acceptance factors.

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