In a Group Audit, the group engagement partner decides not to make reference to the audit of a component auditor. What does this imply?

Answer options:

The component auditor's work was not material.

The group engagement partner assumes responsibility for the work of the component auditor.

The component auditor issued a qualified opinion.

The group engagement partner is sharing responsibility with the component auditor.

How to approach this question

No Reference = Full Responsibility. Reference = Shared Responsibility.

Full Answer

B.The group engagement partner assumes responsibility for the work of the component auditor.✓ Correct

When the group engagement partner accepts responsibility for the work of a component auditor, no reference is made to the component auditor in the auditor's report. The group partner must supervise/review the component auditor's work.

Common mistakes

Thinking 'No Reference' means the component was ignored.

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