At one extreme there are groups where all of the components are dealt with by the group auditor and all of those components are subsidiaries which have been wholly owned since incorporation. In such cases, the audit of the consolidation is generally a fairly straightforward exercise. At the other end there are multinational groups, which have both acquired and sold components in the year, and which have possible impairment issues. Some of the procedures undertaken by auditors in the audit of the consolidation are common to both, but there are clearly many more issues likely to arise in the second situation.
Access Auditing groups: a practical guide (and supplementary material) which provides guidance on:
- obtaining an understanding of group-wide controls and the consolidation process;
- assessing the adequacy of instructions issued by management to components;
- testing the consolidation process;
- evaluating the appropriateness, completeness and accuracy of consolidation adjustments; and
- different accounting policies.
Access your guide to the challenging aspects of group audits
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Auditing groups: a practical guide (and supplementary material) covers some of the more challenging aspects of group audits performed in accordance with International Standard on Auditing 600, Special considerations – audits of group financial statements (including the work of component auditors). The guide draws on the experience of auditors who have acted as both group and component auditors. It does not address all of the requirements of ISA 600 so is not a substitute for reading and being familiar with those requirements.
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