Auditing and Attestation- Certified Public Accountant (CPA) Practice Exam -

If a group engagement partner decides not to refer to a component auditor's work, what is the most likely action they will take?

1. Add an explanation in a footnote.

2. Review the component auditor’s workpapers.

3. Seek permission from the component auditor to omit the reference.

4. Document an assumption of no responsibility.

The correct answer is: Review the component auditor’s workpapers.

The situation of a group engagement partner choosing not to refer to a component auditor's work typically arises from the need to maintain independence and ensure that the audit opinion reflects the work performed. When a group engagement partner decides against referencing the component auditor's work, it is essential to carefully consider the implications for the overall audit quality and the reliability of the opinion. In this context, the most likely action for a group engagement partner is to conduct a thorough review of the component auditor’s workpapers. This review serves multiple purposes. First, it allows the group engagement partner to assess the adequacy of the component auditor’s work, including their compliance with relevant auditing standards and the appropriateness of their findings. A detailed examination of their workpapers provides insight into the component's financial statements and the risks associated with them. Furthermore, the review helps the group engagement partner determine if they can still justify their own conclusions about the group financial statements without formally relying on the component auditor’s work. It is a critical step in assuring that the overall audit remains robust and that the group engagement partner is sufficiently informed to issue a reliable audit opinion. Given the importance of maintaining audit quality and the effectiveness of oversight, reviewing the workpapers is the most responsible action to take in this scenario