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

Ketan & Co. has been appointed auditor of Vihaan Industries Ltd, whose branches are audited by other auditors. Before accepting the role of principal auditor, which of the following must Ketan & Co. consider in deciding whether its own participation is sufficient?

Ketan & Co. must consider the materiality of the portion of financial information it audits itself. That is one of the factors the Standard lists for judging whether the principal auditor's own participation is sufficient. Fees, practice age and distance are not listed factors.

  1. AThe materiality of the portion of the financial information which Ketan & Co. itself auditsCorrect
  2. BThe audit fee charged by the other auditors for the components
  3. CThe number of years the other auditors have been in practice
  4. DThe geographical distance between Ketan & Co.'s office and the components

Explanation

The Standard lists four considerations for acceptance as principal auditor. These are the materiality of the portion the principal auditor audits, knowledge of the components' business, the risk of material misstatement in components audited by the other auditor, and additional procedures giving significant participation. Fees, years in practice and distance are not in that list.

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