[AU 600] Do not refer to a Component Auditor in group audits

Group Auditing Engagements?

 

예시: Pell, CPA, is the group engagement partner in the audit of the financial statements of Tech Consolidated, Inc. Smith, CPA, audits one of Tech’s subsidiaries.

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AU 600

When the group engagement partner assumes responsibility for the work of a component auditor, the auditor’s report on the group statements does not refer to the component auditor.

 

However, the group engagement partner still must be satisfied that those performing the engagement, including component auditors, collectively possess the necessary competence.

 

Moreover, the assumption of responsibility requires involvement in the work of the component auditor.

Involvement may include (1) performing risk assessment procedures, (2) performing further procedures, and (3) reviewing the component auditor’s documentation (AU 600).

 

 

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What it is?

When taking responsibility for another firm’s audit work, the auditor does not refer to the component auditor.

 

Serious concerns about (1) compliance with ethical requirements or (2) lack of competence preclude a reference to the audit of the component auditor.

 

 

The reference is not a qualification of the opinion.

 

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What it indicates?

It indicates that the group auditor does not assume responsibility for the audit of the component auditor.

 

The group auditor should understand the independence and professional competence of the component auditor but does not refer to them in the report. 

 

It also indicates the source of the audit evidence with respect to the component.

 

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What to Ask a componet auditor?

 

The group engagement team should obtain an understanding of the component auditor’s professional competence and compliance with ethical requirements (especially independence).

 

The understanding also addresses (1) the extent of the team’s involvement in the component auditor’s work, (2) whether (s)he operates under regulatory oversight, and (3) whether the team will be able to obtain information about the consolidation process from the component auditor.

 

Moreover, the group engagement partner’s assumption of responsibility for the component auditor’s audit indicates a decision not to refer to the audit of the component auditor.

 

 

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