38. Which of the following statements most accurately describes the decision of whether to make reference to the work of a component auditor? O A. Potential legal liability is higher when reference is made. O B. If reference is made, total audit cost would be expected to be higher. O c. Clients may find a report that makes reference less desirable. OD. The decision must be the same for all components that make up the group. 37. A group auditor is specifically required to make which of the following communications to component auditors if the group auditor is taking responsibility for the component auditor's work? O A. A request for cooperation specifying the context in which the component auditor's work will be used. OB. A list of known related parties, as well as a request for notification of others that might be unidentified. O c. An indication of whether the component auditor complied with the requirements passed down from the group auditor. O D. Communication of findings from the component auditor, including the financial statements and the report. 38. When group financial statements are consolidated the group auditor must obtain an understanding of the consolidation process. As part of that, the group auditor's communications to component auditors should do which of the following? O A. Provide a list of intercompany balances and transactions. O B. Require that group management approve all of the components' financial information. O c. Be clear and describe the accounting policies that will be followed. OD. Encourage that component auditors make suggestions to component management to improve consolidation. 39. When should the group auditor determine component materiality for planning purposes? O A. When the group engagement team will perform or assume responsibility for an audit or review of the component financial information. O B. When components will be consolidated into the group financial statements instead of being part of combined financial statements. O c. When the component auditor will not be referenced in the auditor's report on group financial statements. D. When subsequent events occur that will affect both the component's financial information and the group financial statements as a whole. 40. Sam engages another auditor to do inventory counts at one of his audit client's remote locations. This is not a group audit engagement. Which of the following must Sam do? OA Make reference to the other auditor's work. B. Take responsibility for the other auditor's work. O C. Treat the other auditor as if he or she is a component auditor. D. Allow the other auditor to direct this portion of the engagement