Definition
A component auditor is an auditor who performs work on the financial information of a component at the request of the group engagement team. A component is an entity or business activity for which group management prepares financial information that is included in the group financial statements. A component auditor may be in the group auditor's firm, a network firm or an unrelated firm.
Why it matters in an audit or review
Under AU-C 600 as revised by SAS 149 (effective for audits of group financial statements for periods ending on or after December 15, 2026), the group engagement partner is responsible for the group audit and for the work of component auditors. The group team communicates its requirements, including component performance materiality and relevant ethics requirements, and evaluates the component auditor's work.
Example
A US parent has a subsidiary audited by another firm. The group team sends instructions with a component performance materiality of $120,000 (illustrative), requires that team to confirm independence, holds a call on significant risks, and reviews the component's working papers on revenue before concluding the work is sufficient.
Common mistakes
Treating the component auditor's report as enough. The group team has to evaluate the work and its sufficiency for the group opinion.
Sources
- AICPA, AU-C Section 600, Special Considerations, Audits of Group Financial Statements (Including the Work of Component Auditors), as revised by SAS No. 149
- AICPA, SAS No. 149, effective for audits of group financial statements for periods ending on or after December 15, 2026 (Journal of Accountancy, August 2026)
Definitions paraphrase AICPA and FASB guidance; read the standard itself before relying on a requirement. Example figures are illustrative. This page is guidance, not professional advice. Report an error