Advanced Audit and Assurance (International) · Group audits

Group Audit Framework and ISA 600 (Revised) Explained

Updated 11 October 2026 · Fact-checked

ISA 600 (Revised) sets out special considerations for audits of group financial statements, including work by component auditors. The group engagement partner is responsible for the group opinion and cannot share or reduce that responsibility. You solve questions by identifying components, assessing risks, directing and supervising component work, and evaluating evidence.

Understand Group Audit Framework and ISA 600 (Revised)

A group audit is an audit of group financial statements. Group financial statements include the financial information of more than one entity or business unit, combined through consolidation, proportionate consolidation or the equity method. ISA 600 (Revised) applies to every audit of group financial statements. It builds on the other ISAs. It does not replace them.

A component is an entity or business unit for which the group or management prepares financial information that the group engagement team must include in the group financial statements. A subsidiary, an associate, a division or a business function can all be components. The group engagement team is the group engagement partner and the staff who establish the overall group audit strategy, communicate with component auditors, perform work on the consolidation process and evaluate the conclusions drawn from the audit evidence as the basis for the group opinion. A component auditor is a person outside the group engagement team who performs audit work on a component for the group audit. The component auditor may be from a network firm or another firm, and in some cases from the same firm.

The central idea is that the group engagement partner is responsible for the direction, supervision and performance of the group audit and for the auditor's report. The report must not refer to a component auditor, unless law or regulation requires it. Using a component auditor does not dilute responsibility. If you use component auditors, you must still be satisfied that sufficient appropriate evidence has been obtained on which to base the group opinion.

The revised standard is risk-based and scalable. It replaces the old "significant component" model with a risk-based approach to scoping. The group team decides the nature, timing and extent of work on components based on the risks of material misstatement of the group financial statements. It applies ISA 315 (Revised 2019) and ISA 330 to the whole group. It stresses professional scepticism, communication with component auditors, and the application of ISQM 1 and ISA 220 (Revised) to group engagements. It also lets the group team design procedures for the group as a whole, such as testing at the consolidation level or group-wide controls. For exam purposes, state the principle first: the group team owns the opinion and the work. Then apply it to the scenario.

The IAASB approved ISA 600 (Revised) in 2022. It is effective for audits of group financial statements for periods beginning on or after 15 December 2023. Check the ACCA AAA syllabus and examiner's articles to confirm which version of the standard is examined in your sitting.

Key rules to remember

Scope of ISA 600 (Revised): Applies to all audits of group financial statements, including where component auditors are used; It also applies where the group team does all the work itself.
Component: Component = entity or business unit (or function or activity) whose financial information is included in the group financial statements; It is defined by the financial information included, not by legal form.
Group engagement team: Group engagement team = group engagement partner + staff who establish the overall group audit strategy, communicate with component auditors, perform work on the consolidation process and evaluate conclusions; A component auditor is a person outside the group engagement team. Staff of the group auditor's firm who perform work on a component as part of the group engagement team are team members, not component auditors.
Component auditor: Component auditor = a person outside the group engagement team who performs audit work on a component for the group audit; Not part of the group engagement team. Can be from a network firm or another firm, and in some cases from the same firm.
Responsibility principle: Group engagement partner responsible for direction, supervision, performance and the opinion; Not reduced by the use of component auditors.
Reference in report: No reference to component auditor in the auditor's report, unless required by law or regulation; If law or regulation requires a reference to a component auditor, the auditor's report must indicate that the reference does not reduce the group engagement partner's or firm's responsibility for the group audit opinion.

How to solve Group Audit Framework and ISA 600 (Revised) questions

Use this method for any ISA 600 question, whether it asks for definitions, responsibilities or advice on a scenario.

1Read the requirement and note whether it asks for definitions, responsibilities, procedures or advice.
2Identify the group structure in the scenario: parent, subsidiaries, associates, joint ventures and any other business units.
3Label each item as a component, and note who audits it: group team, network firm or other firm.
4State the principle: the group engagement partner is responsible for the group opinion and the work, including component auditors' work.
5Apply the principle to the facts: for example, the competence of the component auditor, the ethical requirements, and the level of direction and supervision needed.
6Link to risk: explain which risks of material misstatement of the group financial statements are affected by the component and why.
7Conclude with a clear recommendation or answer, and add a professional skills point such as scepticism or clear communication with the client.

Quickest way: Four-line ISA 600 answer

When to use it: Use this when time is short and the question asks you to explain the group auditor's position on a component.

Define: say whether it is a component and who the component auditor is.
State responsibility: the group engagement partner owns the opinion and cannot shift it.
Apply: link to risk, competence, independence and communication.
Conclude: give the action, such as send instructions, review working papers or perform extra procedures.

Common mistakes in Group Audit Framework and ISA 600 (Revised)

Saying the component auditor shares responsibility for the group opinion.
Students think of joint audits or the use of experts.
Fix: State that the group engagement partner alone is responsible for the group opinion. Component auditors report to the group team.
Treating only separate legal entities as components.
Students link the idea to subsidiaries and company law.
Fix: Define a component by the financial information included in the group financial statements. It can be a division, a function or an associate.
Referring to the component auditor in the auditor's report.
Students recall old practice or a different type of reporting.
Fix: Say the report does not refer to the component auditor unless law or regulation requires it, and the responsibility is not reduced.
Writing a list of facts about ISA 600 without applying it.
Students memorise the standard but do not link it to the scenario.
Fix: Use the scenario facts, such as location, size, risk or auditor reputation, in every point.
Confusing the group engagement team with all people working on the group audit.
The definitions sound similar.
Fix: The group engagement team sets strategy, directs, supervises and evaluates. Component auditors perform work on components and are a different group.
Ignoring professional skills marks.
Students focus on technical content only.
Fix: Show scepticism, make commercial points and write clearly for the reader, such as a partner or audit committee.

Worked examples

Example 1

Pinewood Group has a parent and three subsidiaries. A local firm audits one overseas subsidiary, Delta Ltd, which is material to the group. The audit senior asks whether the local firm shares responsibility for the group opinion. Explain the position under ISA 600 (Revised).

Show the solution

Identify: Delta Ltd is a component, as its financial information is included in the group financial statements.
Identify: the local firm is a component auditor because it performs audit work on that component for the group audit.
State the principle: the group engagement partner is responsible for the direction, supervision and performance of the group audit and for the opinion.
Apply: using the local firm does not reduce that responsibility, so the group team must be satisfied that sufficient appropriate evidence is obtained.
Add the reporting point: the auditor's report must not refer to the local firm, unless law or regulation requires it. If it does require a reference, the report must indicate that the reference does not reduce the group engagement partner's or firm's responsibility for the group audit opinion.

Answer: The local firm does not share responsibility. Delta Ltd is a component and the local firm is a component auditor. The group engagement partner remains solely responsible for the group opinion and must be satisfied with the work performed. The report does not refer to the local firm unless law or regulation requires it, and any such reference must indicate that responsibility is not reduced.

Example 2

A group has a parent audited by your firm and a subsidiary audited by a network firm in another country. The group engagement partner wants to know what the group engagement team must consider before relying on the network firm's work. Advise.

Show the solution

Identify the roles: your firm is the group engagement team and the network firm is the component auditor.
Consider competence: whether the component auditor has the necessary competence and capabilities, including knowledge of the financial reporting framework used for the group.
Consider ethics: whether the component auditor understands and will comply with relevant ethical requirements, including independence, for the group audit.
Consider communication and involvement: what the group team will tell the component auditor, how it will direct and supervise, and how it will review the work.
Link to risk: the more significant the risks at the subsidiary, the more involvement the group team needs.
Add a professional skills point: do not assume a network firm is competent just because it is in the network. Apply scepticism and obtain evidence.

Answer: Before relying on the network firm, the group team must assess its competence and its understanding of ethical and independence requirements. It must communicate clearly, direct and supervise the work, and review it in line with the risks. Network membership alone is not enough. The group engagement partner stays responsible for the opinion.

Exam tips

Start every group audit answer by naming the component, the component auditor and the group engagement team from the scenario.
Always state that the group engagement partner is responsible for the opinion. This one sentence earns marks in many questions.
Tie each point to a scenario fact, such as country, size or risk, to score application marks.
Use the standard's risk-based focus: refer to risks of material misstatement of the group financial statements, not only to individual components.
Keep a short professional skills line, such as scepticism about the component auditor's work or clear wording for a partner.

Practice questions from Group audits

Group Audit Framework and ISA 600 (Revised): frequently asked questions

What is a component auditor in a group audit?

A component auditor is an auditor who performs audit work on financial information related to a component for the group audit. They may be from another firm, a network firm or the same firm. They work under the direction of the group engagement team.

Who is responsible for the group audit opinion?

The group engagement partner is responsible for the group audit and the opinion. This responsibility is not reduced by using component auditors. The report does not refer to them unless law or regulation requires it.

What does ISA 600 (Revised) apply to?

It applies to all audits of group financial statements, including where component auditors are used. It works with the other ISAs, such as ISA 315 (Revised 2019), ISA 330 and ISA 220 (Revised). It takes a risk-based and scalable approach.

What is the difference between a component and a subsidiary?

A component is any entity, business unit, function or activity whose financial information is included in the group financial statements. A subsidiary is one type of component. Associates and divisions can also be components.