4 of 5 questions answered Question 5 Company A, a local company, is a subsidiary of Company X, an international financial institution. Based on the preliminary audit strategy, the local audit team will rely on the results of a test of control performed by the primary team. The control operated at the parent level is assessed to be common and is also performed for transactions at the local level. This is the only control tested for derivative assets valuation assertion. The local audit team received the results from the primary team and the control was assessed as Effective. During one of the EDAP’s for Company A, the local team concluded that they can rely on the controls covering the valuation assertion of Company A’s derivative assets. During the substantive testing, the local audit team noted that the derivative transactions of Company A are all below the threshold used in performing the controls for Company X. The TE used in Company’s A audit is at 75,000 CU. The controls tested at the group level indicates that the CFO performs a review control for transactions above 100,000 CU. However, the local entity’s transactions during the year are all below 100,000 CU. How will this information impact the team’s audit strategy for Company A?