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Auditing groups of companies

Group financial statements presents challenges to both group and component auditors.

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Need to know

AUDIT AND ASSURANCE FACULTY Guide to the impact of the war in Ukraine on group auditors
  • Helpsheets and support
  • Mar 2022
  • ICAEW
This guide explores issues faced by UK group auditors with overseas component auditors in light of the Ukraine conflict.
AUDIT AND ASSURANCE FACULTY ICAEW KNOW-HOW Coronavirus (COVID-19): Considerations for group auditors
  • Helpsheets and support
  • Mar 2021
  • Audit and Assurance Faculty
This Audit and Assurance Faculty Know-How guide explores COVID-19 issues faced by UK group auditors with overseas component auditors. It offers practical considerations in relation to the work of component auditors to address the requirements in ISAs (UK). It may also be relevant for group auditors in other jurisdictions with similar requirements.
AUDIT AND ASSURANCE FACULTY Audit & Beyond archive
  • Hub page
  • Jun 2020
Providing valuable content, best practice and topical issues within the profession.
AUDIT AND ASSURANCE FACULTY Preparing an audit report for a group - combined audit report for the group and parent company
  • Helpsheets and support
  • Sep 2018
  • Audit and Assurance Faculty
This guide is designed to explain the main changes that are needed to the audit report of a group compared to that of a company only.
AUDIT AND ASSURANCE FACULTY Preparing an audit report for a group: separate audit reports for the group and parent company
  • Helpsheets and support
  • Jan 2019
  • Audit and Assurance Faculty
This guide is designed to explain the main changes that are needed to the separate audit reports of a group and parent company compared to that of a company only.
Exclusive TECHNICAL ADVISORY SERVICES TECHNICAL ADVISORY SERVICES HELPSHEET Auditing groups - subsidiaries
  • Helpsheets and support
  • Jan 2014
  • Technical Advisory Services
Technical helpsheet issued by to help ICAEW members to understand their responsibilities regarding subsidiaries when auditing the group accounts and the implications on the auditor’s report where access to the financial information of subsidiaries is denied by the parent entity.

Planning your audit of groups

Exclusive AUDIT AND ASSURANCE FACULTY Scoping and materiality on group audits
  • Helpsheets and support
  • Dec 2018
  • Audit and Assurance Faculty
Scoping is probably the single most critical element of a group audit. If group auditors get this wrong, there will be little they can do to salvage the audit because they will either be doing too much and inefficiently, or too little and non-compliant.
Exclusive AUDIT AND ASSURANCE FACULTY Communications and group audit instructions
  • Article
  • Dec 2018
  • Audit and Assurance Faculty
An efficient and effective group audit requires channels of two-way communication between all the parties involved.
Exclusive AUDIT AND ASSURANCE FACULTY Logistics on group audits
  • Helpsheets and support
  • Dec 2018
  • Audit and Assurance Faculty
While the requirements of ISAs present their own problems in group audits, the sheer scale and complexity of some group audits and their logistics are among the biggest headaches auditors face.
AUDIT AND ASSURANCE FACULTY INTERNATIONAL ACCOUNTING AUDITING AND ETHICS Materiality in the audit of financial statements
  • Helpsheets and support
  • Jun 2017
  • International Accounting and Auditing
Applying the materiality requirements in International Standards on Auditing (ISAs) can be challenging. As highlighted in inspection findings, reviews and from experience in practice, it’s an area where improvement could be made.

Performing your audit of groups

Exclusive AUDIT AND ASSURANCE FACULTY Auditing the consolidation
  • Helpsheets and support
  • Dec 2018
  • Audit and Assurance Faculty
Much of the time spent on a group audit is taken up dealing with the various components that make up the group. But the consolidation itself also needs to be audited. The complexity of this process varies enormously.
Exclusive AUDIT AND ASSURANCE FACULTY Review of component auditor work
  • Article
  • Dec 2018
  • Audit and Assurance Faculty
If group auditors wish to use the work performed by component auditors, group auditors must be satisfied that component auditors are sufficiently competent and independent.
Exclusive AUDIT AND ASSURANCE FACULTY Shared service centres and group audits
  • Helpsheets and support
  • Dec 2018
  • Audit and Assurance Faculty
Many companies now use shared service centres. Such centres provide information processing services and other services related to the finance function to multiple components in a group.

Reporting on your audit of groups

Exclusive AUDIT AND ASSURANCE FACULTY Reporting by component auditors and other completion procedures
  • Helpsheets and support
  • Dec 2018
  • Audit and Assurance Faculty
Component auditor reports to group auditors for group audit purposes prompt various matters for consideration.
AUDIT AND ASSURANCE FACULTY Preparing an audit report for a group - combined audit report for the group and parent company
  • Helpsheets and support
  • Sep 2018
  • Audit and Assurance Faculty
This guide is designed to explain the main changes that are needed to the audit report of a group compared to that of a company only.
AUDIT AND ASSURANCE FACULTY Preparing an audit report for a group: separate audit reports for the group and parent company
  • Helpsheets and support
  • Jan 2019
  • Audit and Assurance Faculty
This guide is designed to explain the main changes that are needed to the separate audit reports of a group and parent company compared to that of a company only.

Specific challenges when auditing groups of companies

AUDIT AND ASSURANCE FACULTY Guide to the impact of the war in Ukraine on group auditors
  • Helpsheets and support
  • 24 Mar 2022
  • ICAEW
This guide explores issues faced by UK group auditors with overseas component auditors in light of the Ukraine conflict.
AUDIT AND ASSURANCE FACULTY ICAEW KNOW-HOW Coronavirus (COVID-19): Considerations for group auditors
  • Helpsheets and support
  • 01 Mar 2021
  • Audit and Assurance Faculty
This Audit and Assurance Faculty Know-How guide explores COVID-19 issues faced by UK group auditors with overseas component auditors. It offers practical considerations in relation to the work of component auditors to address the requirements in ISAs (UK). It may also be relevant for group auditors in other jurisdictions with similar requirements.
Exclusive AUDIT AND ASSURANCE FACULTY Non-coterminous year ends, inconsistent accounting policies and subsidiary audit exemption
  • Helpsheets and support
  • 03 Dec 2018
  • Audit and Assurance Faculty
ISA 600 does not cover everything that creates problems for auditors. The following areas pose particular challenges for auditors and need to be dealt with carefully: non-coterminous year-ends; aligning inconsistent accounting policies; and subsidiary audit exemption and the audit of balances.
Exclusive AUDIT AND ASSURANCE FACULTY Letterbox companies
  • Helpsheets and support
  • 03 Dec 2018
  • Audit and Assurance Faculty
Letterbox companies are companies or groups of companies where the general and financial management and the company's operations are located in a different jurisdiction to that of the company's legal registration.

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