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CA Final · Advanced Auditing, Assurance and Professional Ethics · Professional Ethics & Liabilities of Auditors

Under a joint audit of Meghdoot Ltd., the joint auditors divided the work but agreed that the audit of going-concern assessment would be carried out by all of them together. A material error in this area goes undetected. Who bears responsibility?

All the joint auditors are jointly and severally responsible. Where audit work is not divided and is carried out by all of them, as with this common area, responsibility is shared. Limited individual responsibility applies only to work specifically allocated to one joint auditor.

  1. AOnly the joint auditor with the largest fee share
  2. BOnly the joint auditor who was allotted the unit where the error arose
  3. COnly the joint auditor who signed the report first
  4. DAll the joint auditors, jointly and severally, because the work was not divided and was carried out by allCorrect

Explanation

All joint auditors are jointly and severally responsible for audit work that is not divided among them and is carried out by all, and for decisions on common areas. Option B is wrong because allocated-area responsibility applies only to divided work.

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