In August 2018 Delz Ltd acquired all the equity shares of Eba Ltd, a large cable communications provider in Kenya. Eba Ltd is audited by a different audit practice where your firm has no representation. Delz Ltd provides satellite broadcasting services in a rapidly growing market. Significant revenue, cost and capital expenditure synergies are expected as the operations of Eba Ltd and Delz Ltd are being combined into one group of companies. In order to sustain growth, significant costs are expected to be incurred as operations are expanded, networks upgraded and new products and services introduced. The financial statements of Eba Ltd for the year ending 30 September 2020 will continue to be audited by another firm of Certified Public Accountants.

Required:

1. Outline the responsibilities of the principal auditor.   
2. Explain the factors the auditor should consider before relying on the work of the component auditor                                
3. Evaluate the risks of material misstatement to be considered in the audit planning of the individual and consolidated financial statements of the Group 
4. Briefly explain the overall audit procedures of gathering relevant and reliable audit evidence as a basis of conclusion for the consolidated financial statements 

Answer rating: 100% (QA)

aResponsibilities of principal auditor are as follows 1 Engage with audit teams to plan prioritize and perform audit works to ensure timely completion of audit 2 Interview Managers Users and other dep... View the full answer