An auditor is reviewing the work of a component auditor who audited a significant subsidiary of a nonissuer group financial statement audit. The group auditor decides to assume responsibility for the work of the component auditor. Which of the following reporting options is appropriate?

Answer options:

The group auditor issues a standard unmodified opinion and makes no reference to the component auditor.

The group auditor references the component auditor in the opinion paragraph and indicates the magnitude of the portion audited.

The group auditor issues a qualified opinion referencing the component auditor.

The group auditor includes an Other-Matter paragraph naming the component auditor.

How to approach this question

Group Audits: Two paths. 1. Assume Responsibility = No Reference (Standard Report). 2. Divide Responsibility = Reference in Opinion (Modified Wording).

Full Answer

A.The group auditor issues a standard unmodified opinion and makes no reference to the component auditor.✓ Correct

Under AU-C 600, if the group engagement partner decides to assume responsibility for the work of a component auditor, no reference to the component auditor should be made in the auditor's report. The group auditor treats the work as if they performed it themselves.

Common mistakes

Confusing 'Assuming Responsibility' with 'Division of Responsibility'.

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