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Dear Sir / Madam,
Component Auditors are the one who also finalizes Accounts for individual components or we have
3 different types of Auditors
1) Auditors who finalizes accounts for individual Components
2) Auditors who are Component Auditors for the sake of Group Consolidation and
3) Group Auditors at helm of affairs for Consolidation on behalf of GroupIs this three layer arrangement considered good or its’ better to have Same Auditors who would finalize audit for components and also assist Group Auditors in finalizing Group Accounts , in which case structure becomes two layer !
Which one is better !
Deep
from what i learn in class,
component auditors are separate auditors who audit the subsidiary/join venture companies etc who may be different from the parent auditors.
It also depends if having the same auditors is better than having different auditors auditing each component.
if A ltd acquires B ltd which is a foreign subsidiary, then B ltd might have their own local auditors.
The advantage of foreign subs having their own local auditors is that they can provide the expertise as they have the relevant knowledge of the country and the business itself.
Disadvantage of having a different component auditor is that there might be a disagreement between the group auditor and component auditor and component auditor might see the group auditor as a threat to the firm and may refuse to cooperate.There are pros and cons. its probably best for you to list them all out and then make your own conclusion
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