This section includes:
- Scoping and materiality on group audits
- Communications and group audit instructions
- Logistics on group audits
- Auditing the consolidation
- Review of component auditor work
- Shared service centres and group audits
- Reporting by component auditors and other completion procedures
- Non-coterminous year ends, inconsistent accounting policies and subsidiary audit exemption
- Letterbox companies
- Questions and answers on group audits
The need to improve the quality of group audits is highlighted in the results of external regulatory inspections, particularly in relation to oversight of the work of component auditors and the sufficiency of information from the component auditor to support the group audit opinion.
Group audits: the challenges
We can conclude from these regulatory findings, and from experience in practice, that group audits present real challenges for auditors, many of which relate to the need to work effectively with others.
Typically, group auditors will need the support of component auditors who may be based in different countries and be from different firms. Early and thorough planning, comprehensive communication between group and component auditors, and effective project management are therefore vital, together with clear documentation on the audit file. There are, of course, a wide range of group audits, from a simple group where most of the work is performed by a single team in one location, to a major multi-national group involving component auditors in many countries who are part of different audit firm networks. The formality with which communications take place varies significantly, and the project management of audits differ in their complexity. However, many of the principles underpinning group audits and the best practice in performing quality group audits are the same.
IAASB group audits support tools
Access the IAASB’s ISA Module - ISA 600, Special Considerations-Audits of Group Financial Statements
IAASB Group audits project
In 2013, the IAASB published its findings on its post-implementation review of the clarified ISAs. These included findings related to group audits. In developing its Work Plan for 2015-2016, the IAASB included projects on group audits and quality control. Work commenced on group audits in early 2015, and the working group considered the issues identified through the ISA post-implementation review, inspection findings of audit oversight bodies and from ongoing stakeholder outreach.
The IAASB consulted publicly through the Invitation to Comment (ITC), Enhancing Audit Quality: A Focus on Professional Skepticism, Quality Control and Group Audits, which was published in December 2015, with comments requested by May 16, 2016. The ITC included the issues identified and possible responses or actions that the IAASB could undertake.
For the latest news on IAASB project on group audits visit the IAASB’s project page.
