SA 600 — Using the Work of Another Auditor (Revised)

Issued by ICAI AASB · Audit Evidence

Group audits — relationship with component auditors and consolidated FS.

Objective

To obtain sufficient appropriate audit evidence regarding the financial information of the components and the consolidation process to express an opinion on the group financial statements.

Key requirements

Identification of components and significant components
Component materiality (60-85% of group materiality is typical guidance)
Determination of work to be performed on each component (full audit, review, specific procedures)
Communication with component auditors
Review of component auditor working papers for significant components
Evaluation of aggregation risk

Typical procedures

Group audit instructions to component auditors
Review of component auditor working papers
Reconciliation of component reporting to consolidation
Review of consolidation adjustments and elimination entries

Common pitfalls

Component materiality set too high — aggregation risk not addressed
No documented evaluation of the component auditor's competence
CARO clause (xxi) on qualifications by component auditors missed

SA 600 in practice

SA 600 sits in the Audit Evidence phase of the audit. The Standards on Auditing are issued by the ICAI Auditing and Assurance Standards Board (AASB) and deemed to be prescribed by the Central Government under Section 143(10) of the Companies Act 2013. Compliance with SAs is mandatory for every audit conducted by a Chartered Accountant in India.

For authoritative text, refer to the ICAI AASB Compendium of Standards on Auditing at icai.org.

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SA 580 — Written Representations

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SA 610 — Using the Work of Internal Auditors (Revised)