Audit of overseas components
There is a wealth of information and support available to auditors of overseas components.
Group audits are rarely easy for firms of any size, but they can be a particular challenge when the group auditor is a smaller firm and there are components to be consolidated overseas. An ICAEW Council member brought one such scenario to our attention a year or so ago, that involved a UK audit firm and the client acquisition of an overseas subsidiary in France.
None of the accounting staff at the subsidiary spoke English, nor did the local auditor.
The UK auditor’s command of French was up to ordering a couple of glasses of wine, but not much more, and the firm was not part of an international network. It’s the sort of challenge that could trouble any smaller firm involved in a group audit of a client with an overseas subsidiary. How can the member obtain the evidence required under ISA 600 on group audits?
Where can they get help understanding the audit environment and assessing component auditors? Where can they go for assistance to find out what the differences are between UK and French auditing and accounting standards?
We discussed this with a number of training providers and with ICAEW’s Quality Assurance Department (QAD) and all of them acknowledged that such situations, while far from common, are often problematic.
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