AUDITING AND ASSURANCE PRINCIPLES

Term 2 | Semester 2 | SY 2020-2021

Week 8 Module: Audit Reports

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Assessment Manual

Search for your names for your assigned questions. Provide, in the blue box,
your ANSWER and EXPLANATION why such is your answer. Indicate your initials
after the question to signify that you are done answering. You may cite
reference/s to support your answer or simply explain your choice.

1. The most common type of audit report contains a(n)

a. Adverse opinion
b. Qualified opinion
c. Disclaimer of opinion
d. Unmodified opinion

Plasabas, Kyle
D. Unmodified Opinion - This opinion is considered the most positive opinion the auditor
expresses as a conclusion that the audited FS are presented fairly in all material aspects in
accordance with the applicable financial reporting framework. Clients expect this kind of audit
opinion and so auditors too. The other 3 are opinions expressed if there are discrepancies to
the audit evidence and procedures or needs to be highlighted in the audit report. KIP

Correct Answer / Teacher’s Comments

2. Which of the following is not one of the elements of the auditor’s report?
a. Auditor’s address
b. Date of the Auditor’s report
c. Emphasis of a matter
d. Auditor’s signature

Silva, Lynold
 c. Emphasis of a matter, because EOM is a type of paragraph in an
auditor’s report on FS.This paragraph is added to indicate a matter
which is disclosed appropriately in the notes forming part of the financial
statements that the auditor considers is fundamental to the users'
understanding of the financial statements.-LTS

Correct Answer / Teacher’s Comments

3. The date of the auditor’s report

a. Coincides with the date the FS are issued
b. Should be the same as the FS date
c. Can be earlier than the date on which the auditor has obtained sufficient
appropriate evidence on which to base his opinion
d. Should not be earlier than the date of the approval of the FS

Alfanta, Jezza
Answer: D. Should not be earlier than the date of the approval of the FS.
Letter D is the correct answer because the auditor is not in position to conclude that sufficient
appropriate audit evidence has been obtained until the FS has been approved. This means
that, with regards to the date of the auditor’s report, it does not really matter when the FS has
been issued or when the evidence has been obtained, what matters most is when was its
date of approval. Consequently, most auditors even use the date of approval of FS as the
date of their audit reports. -JMA

Correct Answer / Teacher’s Comments

4. The auditor does not normally address the report to

a. Those for whom the report is prepared
b. The president of the client company
c. Those charged with governance of client company
d. The stockholders of client company
Cruz, Neil Patrick
B. The president of the client company. The report shouldn’t be addressed not just
to anyone, especially to those who manage the company. This is to maintain the
independence of works, maintain objectivity and to avoid conflict of interest. Audit
reports are usually addressed to company stockholders or board of directors. NPLC

Correct Answer / Teacher’s Comments

5. Which of the following elements of the auditor’s report affirms the auditor’s
independence?
a. Introductory paragraph
b. Auditor’s responsibility
c. Title
d. Signature

Tampus, Diazzle
C. Title
A title indicating the report is the report of an independent auditor, like when the Independent
Auditor's Report, affirms that the auditor has met all of the ethical requirements including that
of independence and therefore, distinguishes the auditor's report from reports issued by
others.- DMT

Correct Answer / Teacher’s Comments

6. The auditing profession recognizes the need for uniformity in reporting as a

means of
a. Defending against capricious lawsuits
b. Standardizing the policies of various CPA firms
c. Upgrading the communication skills of auditors
d. Avoiding confusion

Navales, Edemson
B. Uniformity is mainly for standardizing because if there is uniformity in various CPA firms
they can easily compare financial reports and equal understanding for the users. -ENN

Correct Answer / Teacher’s Comments

7. Which of the following parties is responsible for the fairness of the

presentations made in the FS?
a. Client’s management
b. Independent auditor
c. Audit committee
d. PICPA

Alonzo, Ann

A.Client’s management.
Management is responsible for the preparation and fair presentation of the FS in
accordance with the state basis of accounting. Management is also responsible for
the design, implementation and maintenance of internal control relevant to the
preparation and fair presentation of FS that are free from material misstatement,
whether due to error or fraud. -AMcA

Correct Answer / Teacher’s Comments

8. An auditor who disclaims an opinion because of inability to obtain sufficient

appropriate evidence should describe the matter in a separate paragraph.
The auditor should also modify the: Basis of opinion | Management’s
Responsibility | Auditor’s Responsibility | Auditor’s Opinion
a. No | No | Yes | Yes
b. Yes | Yes | Yes | No
c. Yes | No | Yes | Yes
d. No | No | Yes | No
Lesaca, Jayvie
c. Yes | No | Yes | Yes
Providing the reasons for the auditor’s inability to obtain sufficient appropriate audit evidence
within the Basis for Disclaimer of Opinion section of the auditor’s report provides useful
information to users in understanding why the auditor has disclaimed an opinion on the
financial statements and may further guard against inappropriate reliance on them. However,
communication of any key audit matters other than the matter(s) giving rise to the disclaimer
of opinion may suggest that the financial statements as a whole are more credible in relation
to those matters than would be appropriate in the circumstances, and would be inconsistent
with the disclaimer of opinion on the financial statements as a whole. Accordingly, paragraph
29 of this PSA prohibits a Key Audit Matters section from being included in the auditor’s report
when the auditor disclaims an opinion on the financial statements, unless the auditor is
otherwise required by law or regulation to communicate key audit matters.- JRL

Correct Answer / Teacher’s Comments

9. An auditor should disclose the substantive reasons for expressing an adverse

opinion in a separate paragraph
a. Preceding the management’s responsibility for the financial statements
b. Preceding the opinion section
c. Following the opinion section
d. Within the notes to the financial statements

Fordan, Shanelle
b. Preceding the opinion section. According to PSA 706, the auditor's report should be
presented according to this manner: 1. Introductory Paragraph, 2. Management Responsibility
for F/S, 3. Auditor's Responsibility, 4. Basis for Adverse Opinion,5. Adverse Opinion. -SLF

Correct Answer / Teacher’s Comments

10. When an auditor modifies his opinion on the financial statements, the basis
for modification paragraph shall include: Description of Material Misstatement
Quantification of Effects of Misstatement – IF MODIFICATION IS BECAUSE
OF MATERIAL MISSTATEMENT (MM); and Description of Scope Limitation |
 Quantification of Effects of Misstatement – IF MODIFICATION IS BECAUSE
OF SCOPE LIMITATION (SL)
a. For MM: Yes | No ; For SL: Yes | No
b. For MM: Yes | Yes ; For SL: Yes | Yes
c. For MM: No | No ; For SL: No | No
d. For MM: No | Yes ; For SL: No | Yes

Gulles, Fe
b. For MM: Yes | Yes ; For SL: Yes | Yes
PSA 706 provides clear guidelines for modified reports. Modification because of
material misstatement and modification because of scope limitation falls under the
category of Basis for Opinion Section and thus said there that if such modification
happened, the auditor should include the description of the nature misstatement and
quantification of the financial effect for MM and for SL the description of scope
limitation and the quantification effects of misstatement. MFG

Correct Answer / Teacher’s Comments

11. In making a decision of whether to disclaim an opinion or withdraw from an

engagement due to a client-imposed limitation, the auditor should consider
a. The materiality of the item under consideration
b. The pervasiveness of effect on FS
c. Both the materiality and pervasiveness should be considered
d. The stage of completion of the engagement at the time the management
imposed the limitation

Mancao, Camelle

C. Both the materiality and pervasiveness should be considered. If effect is both material
and pervasive, the auditor may resign from the engagement or disclaim an opinion on the
financial statements.If there are no alternative procedures performed do not enable the
auditor to obtain sufficient evidence, he can express a disclaimer of opinion on the FS
depending on the materiality and pervasiveness effect on the FS. - CMM
Correct Answer / Teacher’s Comments

12. Circumstance imposed scope limitations include those that are: Beyond the
control of the entity | Related to the nature or timing of the auditor’s work |
Related to the client’s request to omit certain procedures
a. Yes | No | Yes
b. Yes | Yes | No
c. No | No | Yes
d. Yes | Yes | Yes

Garcia, Prince
B. Yes|Yes|No
"Related to the client's request to omit certain procedures" is a client imposed scope
limitation. In this, management is the one preventing, through omission of certain procedures,
the gathering of evidences necessary for the support of an auditor's opinion. The first two
statements are valid since these are both circumstance imposed scope limitation. -pag

Correct Answer / Teacher’s Comments

13. Material misstatements in the FS may arise from all of the following
conditions, except
a. The appropriateness of the selected accounting policies
b. The application of the selected accounting policies
c. The appropriateness or adequacy of disclosures in the FS
d. The sufficiency and appropriateness of audit evidence

Plasabas, Kyle
D. The sufficiency and appropriateness of audit evidence. Choice A and B may still
cause material misstatements in FS when the appropriate policies selected are not
applied right, otherwise, those policies that are applied right may not be suited to a
certain accounting treatment. Choice C may cause misstatements when the
disclosures are not sufficient to address the need for understanding a certain matter.
Choice D is the best answer since these evidences will help you conclude an
unqualified opinion. KIP
Correct Answer / Teacher’s Comments

14. The expression of a qualified opinion means that the financial statements,
taken as a whole are
a. Affected by uncertainties
b. Materially misleading
c. Presented fairly
d. Not presented fairly

Silva, Lynold
c. Presented fairly because a qualified opinion is an auditor's opinion that the
financial statements are fairly presented, with the exception of a specified
area.but still it is still acceptable to USERS like creditors and investors.-LTS

Correct Answer / Teacher’s Comments

15. An auditor was unable to obtain audited FS or other evidence supporting an

entity’s investment in a large subsidiary. Between which of the following
opinions should the entity’s auditor choose?
a. Adverse and unmodified opinion
b. Disclaimer and unmodified opinion with emphasis of matter paragraph
c. Qualified and adverse opinion
d. Qualified and disclaimer of opinion

Alfanta, Jezza
D. Qualified and disclaimer of opinion.
An auditor shall express a qualified opinion when he/she was unable to obtain sufficient
appropriate audit evidence on which to base the opinion, but the auditor concludes that the
possible effects of the undetected misstatements on the FS, if any, could be material but not
pervasive.
While the disclaimer of opinion is appropriate when the auditor is still unable to obtain
sufficient appropriate audit evidence and the undetected misstatements could be material at
the same time pervasive. So we can conclude that letter D is the correct answer. Other
options or combinations of opinions above are not appropriate for this situation. -JMA

Correct Answer / Teacher’s Comments

16. The qualified opinion report will be issued by the independent auditor when,
in the auditor’s judgment, the effects or possible effects of the item under
consideration are
a. Material and pervasive
b. Material but not pervasive
c. Pervasive but not material
d. Not material and not pervasive

Cruz, Neil Patrick

B. Material but not pervasive. The auditor shall express a qualified opinion if the
auditor obtained sufficient appropriate audit evidence, concludes that misstatements,
individually or in the aggregate, are material, but not pervasive, to the financial
statements. NPLC

Correct Answer / Teacher’s Comments

17. If the auditor believes that a required material disclosure is omitted from the
FS, the auditor should decide between using
a. Qualified or an adverse opinion
b. Disclaimer of opinion or a qualified opinion
c. Adverse opinion or a disclaimer opinion
d. Unmodified opinion or a qualified opinion

Tampus, Diazzle

A. Qualified or adverse opinion

 An qualified or adverse opinion relating to a specific matter describe within the basis
for opinion section does not justify the omission of a description of other identified
matters that would have otherwise required a modification of the auditors opinion. In
such case the disclosure of such other matters of which the auditor is aware may be
relevant to users of FS. -DMT

Correct Answer / Teacher’s Comments

18. In which of the following situations would an auditor ordinarily choose

between expressing qualified opinion or adverse opinion?
a. The auditor did not observe the entity’s physical inventory and is unable
to become satisfied as to its balance by other auditing procedures
b. The FS fail to disclose information that is required by PFRS
c. The auditor is asked to report only on the entity’s balance sheet and not
on the other basic FS
d. Events disclosed in the FS cause the auditor to have substantial doubt
about the entity’s ability to continue as a going concern

Navales, Edemson

B. Because failure to disclose what is required by PFRS caused the FS to have material
misstatements and depending on that material misstatements' materiality and pervasiveness,
can the auditor may express either a qualified ir adverse opinion. -ENN

Correct Answer / Teacher’s Comments

19. The report that contains “unmodified opinion with emphasis of matter
paragraph”
a. Arises because of an incomplete audit
b. Arises when the financial statements are not quite “presented fairly”
c. Meets the criteria of a complete audit with the satisfactory results
d. Meets the criteria of a complete audit but with unresolved items
Alonzo, Ann

C. Meets the criteria of a complete audit with the satisfactory results.

Because unmodified opinion implies that the auditor was satisfied with the FS audited.
This means that the statements met the requirements demanded by the regulations
and they were prepared in accordance with accounting principles, criteria and
standards. -AMCA

Correct Answer / Teacher’s Comments

20. The auditor would most likely to consider adding an emphasis of the matter
paragraph when
a. The auditor was not able to obtain sufficient appropriate evidence to
conclude that the financial statements are fairly presented
b. A significant uncertainty arises about the future outcome of an
exceptional litigation
c. The company’s inventories are presented in the financial statements at
fair value
d. The client requested the auditor not to confirm significant receivables
and no alternative procedures were performed

Lesaca, Jayvie
b. A significant uncertainty arises about the future outcome of an
exceptional litigation
When there are significant uncertainties which are adequately accounted for and disclosed in
the notes to the FS, the auditor should consider modifying the report by adding an emphasis
of matter paragraph to highlight the material uncertainty.- JRL

Correct Answer / Teacher’s Comments

21. How would the “Emphasis of the matter” and “Other Matter Paragraph”
normally be presented in the auditor’s report
 a. Emphasis of the matter paragraph is presented before the basis for
opinion the basis for opinion section and the other matter paragraph
b. Other matter paragraph is presented after the emphasis of a matter
paragraph but before the basis for opinion section
c. Emphasis of a matter paragraph is presented after the basis for
opinion but before the other matter paragraph
d. Other matter paragraph is presented before the emphasis of the matter
paragraph

Fordan, Shanelle
c. Emphasis of a matter paragraph is presented after the basis for opinion but before
the other matter paragrarph. Under the framework of the Philippine Standards on Auditing,
the emphasis of matter paragraph is placed after the opinion paragraph but before other
matter paragraph in the auditor's report. -SLF

Correct Answer / Teacher’s Comments

22. The “Other Matters Paragraph” would be appropriate when

a. The auditor wants to restrict the distribution of the audit report
b. The auditor wants to emphasize a matter that is presented or disclosed
in the financial statements
c. The auditor wants to emphasize a matter that is not properly presented
or disclosed in the FS
d. The auditor wants to draw the reader’s attention to an important mater
that caused the auditor to modify his opinions

Gulles, Fe
C. The auditor wants to emphasize a matter that is not properly presented or disclosed
in the FS.
Other Matters Paragraph is a paragraph that is included in the auditor’s report that refers to
other matters not disclosed in the financial report that according to an auditor’s judgement is
relevant to users to understand the auditor’s report. MFG

Correct Answer / Teacher’s Comments

 23. An auditor who concludes that an uncertainty is not adequately disclosed in
the FS should issue a(n)?
a. Disclaimer of opinion
b. Unmodified opinion with emphasis of the matter paragraph
c. Special report
d. Qualified report

Mancao, Camelle

D. Qualified Report. If the auditor concludes that a matter involving a risk or an uncertainty
is not adequately disclosed in the financial statements in conformity with generally accepted
accounting principles, the auditor should express a qualified or an adverse opinion and state
the reason for the modification in the 'Basis for Qualified or Adverse Opinion' section of the
report. - CMM

Correct Answer / Teacher’s Comments

24. Which of the following will not normally require emphasis of matter of
paragraph in the auditor’s report?
a. FS are prepared using cash basis of accounting
b. FS contains material misstatements
c. FS include disclosures about a recent typhoon destroyed significant
portion of the entity’s inventory
d. FS are affected by a significant uncertainty

Garcia, Prince
B. FS contains material misstatements
I have no doubt including letters C & D in the emphasis of matter paragraph since letter C is a
major catastrophe and D is simply significant uncertainty. I don't think letter A is invalid either
since cash basis accounting is a special purpose framework (Am I right? Haha). EOM
Paragraph only includes those matters presented/disclose in FS, necessary for the
fundamental understanding of FS. I don't think a disclosure of "FS contains material
misstatement" is something an entity would do (never heard of it). Moreover, emphasis of
KAM is based on audited FS. -pag

Correct Answer / Teacher’s Comments

25. The Other Matter Paragraph is used by the auditor

a. To draw the readers’ attention to a matter that is presented in the FS
b. To draw the reader’s attention to a matter that is disclosed in the notes
to the FS
c. To draw the reader’s attention to a matter that is not presented or
disclosed in the FS
d. To draw the reader’s attention to a matter that caused the auditor to
modify his opinion

Plasabas, Kyle
C.To draw the reader’s attention to a matter that is not presented or disclosed in the
FS. Choice A and B are the purposes of Emphasis of Matter Paragraph while Choice
D is the section for Basis of Opinion. C is the correct answer since this wholly
describes why the Other Matter Paragraph is included in the audit report. KIP

Correct Answer / Teacher’s Comments

26. The use of an “Emphasis of the Matter” paragraph shall be limited only to
those matters
a. Disclosed in the FS
b. Affecting the auditor’s opinion
c. Not presented in the FS
d. Involving an uncertainty

Silva, Lynold a. Disclosed in the FS, bacause to include more information in an

Emphasis of Matter paragraph than is presented or disclosed in the financial
statements may imply that the matter has not been correctly presented or
disclosed.-LTS

Correct Answer / Teacher’s Comments

27. When the auditor concludes that there is substantial doubt about the entity’s
ability to continue as a going concern, and this fact is adequately disclosed in
the notes to the FS; the appropriate audit report could be: 1. An unmodified
opinion with the emphasis of the matter paragraph; 2. A qualified opinion
a. 1 only
b. 2 only
c. 1 and 2
d. Neither 1 nor 2

Alfanta, Jezza
D. Neither 1 nor 2
In the event when there is substantial doubt about the entity’s ability to continue as a going
concern and this fact has been adequately disclosed in the notes to the FS the auditor should
issue a report that contains an unmodified opinion with a separate section “Material
Uncertainty Related to Going Concern”. And not an unmodified opinion with the emphasis
of the matter paragraph nor a qualified opinion. Therefore, the correct answer is letter D. -JMA

Correct Answer / Teacher’s Comments

28. When management prepares FS based on a going concern, but the auditor
believes the use of the going concern assumption is not appropriate, the
auditor would most likely issue an auditor’s report that contains
a. A qualified report
b. An unmodified report with respect to the income statement and an
adverse opinion with respect to the balance sheet
c. A disclaimer of opinion
d. An adverse opinion
Cruz, Neil Patrick
D. Adverse opinion. When the auditor concludes that the going concern basis is
inappropriate in the entity’s circumstances. The auditor should issue an adverse
opinion. An adverse opinion states that the financial statements do not present
fairly.This opinion will be expressed regardless of whether or not the financial
statements include disclosure of the inappropriateness of management’s use of the
going concern basis of accounting. NPLC

Correct Answer / Teacher’s Comments

29. When the auditor concludes that there is substantial doubt about the entity’s
ability to continue as a going concern, which was not adequately disclosed in
the notes to the FS, the appropriate audit report would include
a. A qualified opinion or adverse opinion
b. An umnmodified opinion with emphasis of matter paragraph
c. A qualified or disclaimer of opinion
d. An unmodified opinion with going concern section

Tampus, Diazzle
A. Qualified or adverse
material uncertainty exists when the impact of going concern problem is significant,the
auditor's judgement, clear disclosure of the nature and implications of the uncertainties
is necessary for the fair presentation of FS. If disclose the auditor should issue a
report of unmodified opinion with separate section by material uncertainty related to
FS, but if not adequately disclosed, then the auditor should express choice A or
qualified opinion or adverse opinion. - DMT

Correct Answer / Teacher’s Comments

30. If an amendment is necessary in the other information and the entity refuses
to make an amendment, the auditor, depending on the particular
circumstance, may do any of the following except
 a. Describe the material inconsistency in other matter paragraph
b. Not issue an audit report
c. Withdraw from the engagement
d. Express either qualified or adverse opinion

Navales, Edemson

D. Because to express a qualified or adverse opinion is when there are necessary

amendments for FS and this due to material misstatements unlike amendments in other
information considers material inconsistencies. -ENN

Correct Answer / Teacher’s Comments

31. If an amendment to other information in a document containing audit FS is

necessary and the entity refuses to make the amendment, the auditor would
consider issuing
a. C
b. Qualified or disclaimer of opinion
c. Unmodified opinion with other information section
d. Unmodified opinion

Alonzo, Ann

A.Qualified or adverse opinion. (sure a or b)

Because if the amendment is necessary in the FS and the entity refuses to amend,
the auditor should issue a report that contains ‘a’ Qualified or adverse opinion.
-AMCA

Correct Answer / Teacher’s Comments

32. This exists, when other information, not related to matters appearing in the
FS, is incorrectly stated or presented
 a. Material inconsistency
b. Material misstatement
c. Material misstatement of fact
d. Material error affecting the other information

Lesaca, Jayvie
c. Material misstatement of fact
It helps auditor to comply with ethical principle of integrity which requires the CPAs should not
be associated with misleading information. This will also help in identifying inconsistencies
that may lead to conclusion that the other information is materially misstated.-JRL

Correct Answer / Teacher’s Comments

33. The auditor will most likely read the other information
a. Primarily to identify material misstatement of fact
b. Primarily to identify material inconsistency
c. To determine the type of opinion to express on the FS
d. To enable him to express an opinion on the other information

Fordan, Shanelle
b. Primarily to identify material inconsistency. The auditor is required to read all financial
and non-financial information (other information) included in the annual report and to identify
whether the other information is materially inconsistent with the financial statements or the
auditor’s knowledge obtained in the audit or otherwise appears to be materially
misstated.-SLF

Correct Answer / Teacher’s Comments

34. The “other information” in a published report containing audited FS may be

relevant to an independent auditor’s examination. With respect to other
information
a. The auditor’s responsibility does not extend beyond the financial
information identified in the report
 b. The auditor is obligated to perform auditing procedures to corroborate
“other information” contained in the document
c. The auditor need not be concerned with the “other information”
d. The auditor must include the other information in the report

Gulles, Fe
A. The auditor’s responsibility does not extend beyond the financial information
identified in the report.
As I have read and understood, the auditor's responsibility does not extend beyond
the financial information identified in his report and has no obligation to perform any
procedures. However, he/she should consider the other information for him/her to
know if their is in need of revision. MFG

Correct Answer / Teacher’s Comments

35. Which of the following statements concerning communication of key audit

matters in the auditor’s report is incorrect?
a. Communication key audit matters in the auditor’s report enhances the
communicative value of the auditor’s report by providing greater
transparency about the audit that was performed
b. Communicating key audit matters provides additional information to
intended users of the FS to assist them in understanding those matters
that in the auditor’s judgement were of most significance in the audit of
the FS of the current and prior periods
C. Communicating key audit matters may assist intended users in
understanding the entity and areas of significant management
judgement in the audited FS
d. The auditor’s determination of key audit matters is limited to those
matters of most significance in the audit of the FS of the current period
even when comparative FS are presented

Mancao, Camelle

B. Communicating key audit matters provides additional information to intended users

of the FS to assist them in understanding those matters that in the auditor’s judgement
were of most significance in the audit of the FS of the current and prior periods. Letter
B statement is incorrect. Communicating key audit matters provides additional information to
intended users of the FS to assist them in understanding those matters that in the auditor’s
judgement were of most significance in the audit of the FS of the current period ONLY. Letter
A statement is correct. It adds communicative value as KAM emphasizes significant matters
affecting the FS. It helps readers to understand the FS and provides greater transparency with
the report. Letter C statement is correct. The primary objective of KAM includes addressing
the most significant matters of the audited FS. Letter D statement is correct. The KAM
focuses on the audit of the FS of the current period only when when comparative FS are
presented.- CMM

Correct Answer / Teacher’s Comments

36. If the group auditor decides to refer into the report made by the component
auditor
a. The group auditor assumes responsibility for the report of the other
auditor
b. The component auditor is relieved of responsibility for his report but
not his work
c. The group auditor has violated the professional standards
d. The component auditor is relieved of responsibility for his work but not
his report

Garcia, Prince
C. The group auditor has violated professional standards.
Letter A is incorrect because referring to the report made by a component auditor does not
correspond to group auditor's responsibilities, by definition- that is reporting responsibilities.
Letters B & D is invalid as well since a group auditor's reference to the report made by
component auditor (and even if no reference made),won't relieved them from their
responsibilities both in their report and work, which includes their overall findings, conclusions,
opinions. Letter C is the right answer. The group auditor's reference to component auditor's
report is a violation of the professional standard since the group auditor is the one charged
with reporting responsibilities. Group auditor is allowed to rely on the work, findings of
component auditor (to form the report) but this does not include reference to their report. -pag

Correct Answer / Teacher's Response