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MikeLittle.
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Muslim Farooque
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i was a little unclear about one things sir that, i know that they are individual accounts for subsidiaries and parents combined into consolidated set of accounts; now for example if the subsidiaries accountants are inexperienced in group scenario ; then can an their inexperience effect the group accounting adjustments? i would imagine that the parents accountants would be involved in doing the consolidation entirely;
MikeLittle
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But the parent’s auditors need to be working with reliable information
That’s why one of the matters to which those group auditors need to direct their attention is the quality of the component auditors
In practice it should not ordinarily be an issue and it will always be a dangerous statement to make in an exam answer where you may feel tempted to disparage an accounting qualification other than ACCA
For example, the capabilities of a qualified member of the Institute of Chartered Accountants in England and Wales should not be called into question – just because they are not ACCA qualified does not necessarily make them any less capable than ACCA
Muslim Farooque
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no but if the subsidiary has no experience of being in a group but produces their individual statements correctly, how can it be a risk to the groups accounts ?
MikeLittle
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It’s potentially (theoretically) the case that consolidation adjustments (like pups) are overlooked by the inexperienced component auditors
But, as I said before, that’s most unlikely in practice
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