- 1 Marks
Question
When a client has control over a subsidiary, what is the most appropriate audit procedure to obtain evidence to verify subsidiary accounts before consolidation?
A. Arrange for independent valuation of the assets and liabilities of the subsidiary
B. Be involved in the appointment of the subsidiary auditors
C. Rely on additional work carried out by the internal auditors
D. Send a template of your expectation to subsidiary auditors
E. Provide audit program for the subsidiary auditors
Answer
D. Send a template of your expectation to subsidiary auditors
Explanation:
Sending a template of the auditor’s expectations to the subsidiary auditors is the most appropriate procedure. This approach ensures that the subsidiary auditors perform specific procedures aligned with the group auditor’s requirements, facilitating consistency and reliability in the subsidiary’s accounts before consolidation. Other options, such as appointing auditors or providing an audit program, may not be as effective in ensuring the necessary audit standards and expectations are met.
- Tags: Audit Procedure, Consolidation, Group Audits, Subsidiary Accounts
- Level: Level 3
- Topic: Group audit
- Series: NOV 2012
- Uploader: Dotse