MCQ 4 — SA 299 This one attacks the “joint auditor checks everything” misconception PQR Ltd.

MCQ 4 — SA 299

This one attacks the “joint auditor checks everything” misconception

PQR Ltd. has appointed CA A and CA B as joint auditors.

The work allocation document, signed by both auditors and communicated to TCWG, assigns:

revenue and receivables to A;
inventory and property, plant and equipment to B.

During the audit, B notices that a particular inventory purchase arrangement has an unusual contractual term that potentially affects the recognition of a significant revenue transaction falling within A’s allocated area.

B discusses the matter with A orally. A agrees that the matter has implications for revenue and states that A will consider it while completing the revenue audit.

A subsequently performs the required procedures and both auditors agree on the treatment.

Which ONE of the following best describes the responsibility arising from these facts?

A. A alone is responsible because revenue was allocated to A and B’s role ended after drawing A’s attention to the matter.

B. B remains solely responsible because B originally identified the unusual term and therefore must perform all procedures necessary to resolve its consequences.

C. Both auditors become jointly and severally responsible for every procedure performed by either auditor merely because they agreed on the accounting treatment.

D. The work allocation remains relevant, but the matter communicated by B and agreed upon by both auditors falls within the category of matters for which the joint auditors have joint and several responsibility; the individual execution of procedures in A’s allocated area remains A’s responsibility.