What are the audit standards in regards to auditing a company that has both an
External audit for company with more than one entity
Answers
More information about the ownership and corporate structure is needed to give a definitive answer. However, if the financial statements are going to be presented on a consolidated or combined basis, the audit will cover both entities. That is, the audit is an audit of the financial statements as presented, not of one entity or another.
More often than not you will audit both. Consolidated financial reporting will certinaly require both, and the size or impact of the investment company on the larger company may also require that. The nature of the relationship is also a factor. If the entity is private, auditing both may be needed to ensure a full understanding of operations in the operating company.
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Barrett and Stephen thanks for your responses. You are correct in that I needed to provide more info on the structure. I found out that both entities are 100% owned by the same owner which I believe would fall under the consolidation rules and therefore both entities would be audited as you mentioned. Thank you both very much!
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