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

Under U.S. GAAS, when would a group engagement partner most likely not refer to a component auditor?

1. If the work was done under the group engagement partner's guidance.

2. If the component auditor's work is impractical to review.

3. If the group engagement partner is unsatisfied with the component auditor's reputation.

4. If the financial statements are material to the group.

The correct answer is: If the work was done under the group engagement partner's guidance.

The scenario in which a group engagement partner most likely will not refer to a component auditor occurs when the work was done under the group engagement partner's guidance. In this context, when the group engagement partner has provided direct oversight and supervision to the component auditor, they can be confident in the quality and reliability of the work performed. This close involvement means that the group engagement partner may not need to explicitly reference the component auditor’s work in the audit report because they are effectively integrating their findings into the overall audit conclusion based on their own direct involvement and understanding. By providing guidance, the group engagement partner ensures that the component auditor adheres to the required standards and performs the work as expected. This contrasts with situations where the partner is less involved or has concerns regarding the quality of the component auditor’s work. In such cases, referring to the component auditor would typically be necessary to clarify the contribution of the component auditor to the overall audit. The other situations imply a need for referral due to concerns about oversight, practicality, or the reputation of the component auditor, prompting the group engagement partner to ensure clarity in the audit report regarding the contributions from various auditors.