[Boate]

I’m not sure why I’m having such a difficult time understanding this one question but maybe someone can explain it to me in a way it makes sense. Here is the question:

In the auditor’s report under U.S. GAAS, the group engagement partner decides not to make reference to another CPA who audited a client’s subsidiary. The group engagement partner could justify this decision if, among other requirements, the group engagement partner:

a. Issues an unmodified opinion on the consolidated financial statements.

b. Is satisfied as to the independence and professional reputation of the component auditor.

c. Learns that the component auditor issued an unmodified opinion on the subsidiary’s financial statements.

d. Is unable to review the audit programs and audit documentation of the component auditor.

The correct answer is B, but to my understanding I thought that when an auditor chose NOT to reference the comp. auditor, he/she wasn’t satisfied with their work so the group engagement team/partner would do the audit work for the subsidiary. If the component auditor is independent and has integrity, why would the group engagement partner not choose to reference them in the auditors report?

AUD: (65)(66) 77
REG: (66) (48) destroyed me mentally.....
FAR: (68) (66)(69)(71)
BEC: (63) 75

"Greatness is not some precious thing, it is no more unique to us than breathing. We are ALL capable of it."

[Iron_Victory]

If the auditor is relying on the work of a component auditor in his/her audit opinion we do not reference a component auditor.

If we do reference a component auditor we are saying “hey that guy did the work, they are responsible if something should come up”

I think you just have to flip it around.

AUD - (74),78
BEC - 85
FAR - 86
REG - 84

[Iron_Victory]

If the auditor is relying on the work of a component auditor in his/her audit opinion we do not reference a component auditor.

If we do reference a component auditor we are saying “hey that guy did the work, they are responsible if something should come up”

I think you just have to flip it around.

AUD - (74),78
BEC - 85
FAR - 86
REG - 84

[Study Monk]

Yes what Iron_Victory said

If you do not reference the component auditor it means that you trust him and are willing to take any blame for his incompetence, so you need to be able to trust his independence and reputation. I think you also confusing “not referencing” with “not using his work”. In all the questions that say “not referencing” the group engagement partner uses the work…he just doesn't reference the component auditor.

If you reference the component auditor you are saying “I don't know about this guys work, so I want him to take credit for it”

If you don't reference the component auditor you are saying ” That guys work was great no need to waste my time with an other matter paragraph naming him”

I spoke to an ancient wise man who sent me on a mushroom induced journey through an ancient forest to find the key to passing the CPA exam. A talking spider monkey told me to throw the last of my drinking water in the dirt to find what I was looking for. So I followed his instructions and the following message appeared in the soil:

"Do 5000 multiple choice questions for each section"

[Study Monk]

Yes what Iron_Victory said

If you do not reference the component auditor it means that you trust him and are willing to take any blame for his incompetence, so you need to be able to trust his independence and reputation. I think you also confusing “not referencing” with “not using his work”. In all the questions that say “not referencing” the group engagement partner uses the work…he just doesn't reference the component auditor.

If you reference the component auditor you are saying “I don't know about this guys work, so I want him to take credit for it”

If you don't reference the component auditor you are saying ” That guys work was great no need to waste my time with an other matter paragraph naming him”

I spoke to an ancient wise man who sent me on a mushroom induced journey through an ancient forest to find the key to passing the CPA exam. A talking spider monkey told me to throw the last of my drinking water in the dirt to find what I was looking for. So I followed his instructions and the following message appeared in the soil:

"Do 5000 multiple choice questions for each section"

[Boate]

Great, awesome explanations Iron and Monk, guess I just had it backwards but I get it now. Thanks!

AUD: (65)(66) 77
REG: (66) (48) destroyed me mentally.....
FAR: (68) (66)(69)(71)
BEC: (63) 75

"Greatness is not some precious thing, it is no more unique to us than breathing. We are ALL capable of it."

[Boate]

Great, awesome explanations Iron and Monk, guess I just had it backwards but I get it now. Thanks!

AUD: (65)(66) 77
REG: (66) (48) destroyed me mentally.....
FAR: (68) (66)(69)(71)
BEC: (63) 75

"Greatness is not some precious thing, it is no more unique to us than breathing. We are ALL capable of it."

[Author]

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