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Audit and Assurance · The work of others

Reliance on Other Auditors and Group Audit Considerations

Updated 11 October 2026 · Fact-checked

Reliance on other auditors means a group auditor uses work done by component auditors, or an earlier auditor for opening balances. You assess their competence, independence and the risk, direct and review their work, and obtain enough evidence yourself. You keep sole responsibility for the opinion and cannot blame the other auditor.

Understand Reliance on Other Auditors and Group Audit Considerations

In a group audit, the group engagement partner signs the opinion on the consolidated financial statements. Some subsidiaries or divisions (components) may be audited by other firms. Those firms are component auditors. The group auditor is often called the principal auditor in exam questions.

The key principle is that the group auditor keeps full responsibility for the group opinion. Using another auditor does not share or reduce that responsibility. The audit report does not refer to the component auditor in an unmodified opinion. So you must be satisfied that the work is good enough.

The group auditor must first understand the group, its components and the environment. Then you decide which components are significant because of their size or because they carry significant risks. For significant components, more work is needed. For insignificant ones, analytical procedures at group level may be enough.

Before relying on a component auditor, assess their professional competence, their independence and their understanding of the relevant ethical requirements. Also consider their familiarity with the financial reporting framework and the group's accounting policies, and the level of regulatory oversight they work under. Then communicate clearly: instructions on the work needed, component materiality, risks, and reporting deadlines. Review their working papers or hold discussions, and evaluate their findings.

A similar issue arises for opening balances on a first-year audit (ISA 510). If the predecessor auditor gave an unmodified opinion, that helps but is not enough alone. You perform your own procedures on opening balances, and may review the predecessor's working papers after getting permission. If you cannot get enough evidence on opening balances, you must consider a modified opinion.

Key rules to remember

Responsibility principle
Group auditor's responsibility for the opinion = 100% (not reduced by using component auditors)
Do not refer to the component auditor in an unmodified report. Say the group auditor is solely responsible.
Assessing a component auditor
Competence + Independence + Ethical and framework understanding + Oversight
Use this as a checklist when asked what you consider before relying on another auditor.
Component work by significance
Significant component → audit of its financial information (or specified procedures for significant risks). Other components → analytical procedures or limited procedures
Work is scaled to size and risk. Component materiality is set lower than group materiality.
Opening balances (ISA 510)
Opening balances evidence = Review of prior year audit / predecessor work + own procedures
Predecessor's clean opinion is not sufficient by itself. If evidence is lacking, consider a qualified opinion or disclaimer.

How to solve Reliance on Other Auditors and Group Audit Considerations questions

Use this method for any question on using other auditors, whether component auditors or a predecessor.

  1. 1Identify the situation: component auditor in a group, or predecessor auditor for opening balances.
  2. 2State the key principle: the group or current auditor keeps full responsibility for the opinion.
  3. 3Decide which components are significant by size or risk, and match the level of work to each.
  4. 4Assess the other auditor: competence, independence, ethics, framework knowledge and oversight. Use the facts in the scenario.
  5. 5Describe communication and control: clear instructions, component materiality, risks, reporting deadlines, and review of working papers or meetings.
  6. 6Evaluate their work and findings. Decide if you need extra procedures or your own involvement.
  7. 7Conclude on the effect on the opinion. If evidence is insufficient, state the modification and its type.
  8. 8Link each point to the specific facts given, such as an unfamiliar firm or a late report.

Quickest way: Four-question check

When to use it: Use this for Section A or B objective questions and for short requirements worth a few marks.

  1. Who signs the opinion? The group auditor, always.
  2. Is the component significant? If yes, expect more work and more involvement.
  3. Is the other auditor competent and independent? Check the scenario for red flags such as unknown firm or a link to the client.
  4. Is the evidence enough? If not, do more work. If still not, modify the opinion.

Common mistakes in Reliance on Other Auditors and Group Audit Considerations

  • Saying responsibility passes to the component auditor.

    Students think using another firm shares the risk.

    Fix: Always state that the group auditor remains solely responsible for the group opinion.

  • Relying on a component auditor without assessing them.

    Students assume another professional firm is automatically reliable.

    Fix: List competence, independence, ethical understanding and oversight, and apply each to the scenario.

  • Auditing every component in full.

    Students forget that work depends on significance and risk.

    Fix: Separate significant components from others and scale the work.

  • Accepting the predecessor's clean opinion as enough for opening balances.

    Students treat the prior opinion as proof.

    Fix: Say it is useful but you still need own procedures, such as reviewing working papers and testing items.

  • Referring to the component auditor in an unmodified opinion.

    Students think transparency is required.

    Fix: Remember that the report does not mention them when the opinion is unmodified, because the group auditor takes full responsibility.

  • Giving generic answers not tied to the scenario.

    Students recall the list but do not apply it.

    Fix: Quote the facts, such as a small local firm or a late timetable, and explain the specific risk.

Worked examples

Example 1

Your firm audits Zeta Group. A subsidiary, Kora, which makes up a large part of group revenue, is audited by a small firm unknown to you in another country. Explain the matters you consider before relying on its work and the extent of your responsibility.

Show the solution
  1. Responsibility: you are the group auditor and remain solely responsible for the group opinion, even though Kora's auditor does the work.
  2. Significance: Kora is a large part of revenue, so it is a significant component. You need to be heavily involved and require an audit of its financial information.
  3. Competence: the firm is unknown, so find out its experience, resources and qualifications and its knowledge of the group's framework and policies.
  4. Independence and ethics: confirm it is independent of Kora and the group and understands the relevant ethical requirements.
  5. Oversight: find out if it is subject to professional regulation or quality review in its country.
  6. Communication: send clear instructions on work, component materiality, risks, and deadlines, and ask for confirmation of compliance.
  7. Review: discuss risks and review its working papers, and perform extra procedures if the work is not adequate.

Answer: You may rely on the firm only after assessing its competence, independence, ethics knowledge and oversight, and after directing and reviewing its work for this significant component. You keep full responsibility for the group opinion.

Example 2

You are the new auditor of Dalin Ltd. The prior year was audited by another firm, which gave an unmodified opinion. Explain how you obtain evidence on opening balances and the effect if you cannot.

Show the solution
  1. Purpose: opening balances affect current year results, so they must be free from material misstatement and consistently applied.
  2. Review the predecessor's audit report and, with the client's permission, their working papers, after considering their competence and independence.
  3. Perform own procedures: for example, check that prior year closing balances were brought forward correctly and that policies are consistent.
  4. Test items directly: for example, inventory by testing current year sales or purchases, and receivables by subsequent receipts.
  5. If sufficient evidence cannot be obtained, the possible effect is material, so modify the opinion.
  6. The type depends on pervasiveness: a qualified opinion (except for) if material but not pervasive, or a disclaimer if pervasive.

Answer: The predecessor's clean opinion helps but is not enough. You review their work and carry out your own procedures. If evidence remains insufficient, you issue a qualified opinion or a disclaimer, depending on pervasiveness.

Exam tips

  • Start every answer with the principle that the group or current auditor keeps full responsibility. It earns an easy mark.
  • Use the scenario facts. Marks go to points tied to the unknown firm, the large component or the late timetable.
  • For objective questions, spot the trap: any option that says responsibility is shared or transferred is wrong.
  • In written answers, structure by headings such as competence, independence, communication and review so each point is clearly credited.
  • For opening balances, always mention both what you do and the opinion effect if evidence is lacking.

Reliance on Other Auditors and Group Audit Considerations in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Reliance on Other Auditors and Group Audit Considerations: frequently asked questions

Who is responsible for the group audit opinion?

The group engagement partner and firm are solely responsible. Using component auditors does not reduce that responsibility, and an unmodified report does not refer to them.

What should I check before relying on a component auditor?

Check their professional competence, independence, understanding of ethical requirements and the reporting framework, and the oversight they operate under. Then direct and review their work.

Can I rely on the predecessor auditor for opening balances?

You can use their report and working papers as part of the evidence, but you must also carry out your own procedures. If evidence is insufficient, you consider a modified opinion.

Which standards cover this topic?

ISA 600 deals with group audits and the work of component auditors. ISA 510 covers opening balances in initial audit engagements. Know the main principles of both for the exam.