ISA 600 (REVISED AND REDRAFTED) SPECIAL CONSIDERATIONS — AUDITS OF GROUP FINANCIAL STATEMENTS (INCLUDING THE WORK OF COMPONENT AUDITORS)
The objectives in ISA 600 (revised and redrafted) are twofold. First and foremost, the group auditor needs to establish that it is appropriate to act in the capacity of group auditor. Secondly, the group auditor also needs to ensure that sufficient appropriate audit evidence is gathered to support the opinion contained in the consolidated financial statements of the group. For the purposes of ISA 600:
‘Principal auditor’ means the auditor with responsibility for reporting on the financial statements of an entity when those financial statements include financial information of one or more component auditors audited by another auditor.
‘Other auditor’ means an auditor, other than the principal auditor, with responsibility for reporting on the financial information of a component which is included in the financial statements audited by the principal auditor. Other auditors include affiliated firms, whether using the same name or not, and correspondences, as well as unrelated auditors.
‘Component’ means a division, branch, subsidiary, joint venture, associated entity or other entity whose financial information is included in the financial statements audited by the principal auditor.
Consider the following illustration:
AMG Inc is an entity who is registered in the UK. It has a wholly-owned subsidiary in China who carries a material ...