Advanced Auditing, Assurance and Professional Ethics · Group Audits

SA 600: Reporting, Division of Responsibility and Modified Opinions

Updated 5 October 2026 · Fact-checked

Under extant SA 600, the principal auditor signs the report on the whole entity. If satisfied with the other auditor's work, you either report without reference or refer to the other auditor and state the magnitude of that portion. Reference never reduces your responsibility. If you cannot use the work, give a qualified opinion or a disclaimer.

Understand Reporting, Division of Responsibility and Modified Opinions

A principal auditor audits the financial statements of an entity that includes financial information audited by another auditor, such as a branch, subsidiary or joint venture. The other auditor audits that part. The principal auditor still signs the report on the whole.

The central idea is responsibility. You alone are responsible for the opinion on the whole financial statements. Using another auditor's work does not shift that responsibility. So your first test is always: have I done enough to take that responsibility, given the other auditor's competence and the size of their portion?

This page follows the extant SA 600, Using the Work of Another Auditor. It does not follow SA 600 (Revised), which takes a different approach to reporting. Check which version your study material covers.

Under the extant SA 600, once you are satisfied with the other auditor's work, you have two reporting options:

Report without reference to the other auditor. You do this when you are satisfied with the other auditor's work and report on the whole without mentioning that auditor.
Refer to the other auditor's report. You state the division of responsibility: you say that part was audited by another auditor, and you indicate the magnitude of that portion, for example by its share of total assets or revenue.

If you refer, the report states the division of responsibility. Either way, your responsibility for the opinion is not reduced. The reference only describes who audited what. It is not a way to share or shift responsibility.

The Companies Act, 2013 also has a specific reporting requirement for branches. Section 143(3)(c) requires the auditor's report to state whether the report on the accounts of a branch office, audited by a person other than the company's auditor, has been received, and how it was dealt with. This is a specific statutory reporting requirement. You deal with it in addition to the SA 600 reporting choice.

Modification is the third piece. If you decide you cannot use the other auditor's work and cannot perform enough additional procedures on that portion, you have a scope limitation. You then give a qualified opinion or a disclaimer of opinion. Separately, if the other auditor's own report is modified, you must judge whether the matter is significant enough to modify your report on the whole.

The exam answer follows this logic: responsibility, then the reporting choice (no reference or reference with magnitude), then modification.

Key rules to remember

Responsibility rule: Opinion on the whole = principal auditor's responsibility alone; Using or referring to the other auditor never reduces this responsibility.
Reporting options (extant SA 600): Satisfied with other auditor's work → report without reference, OR refer to the other auditor's report and indicate the magnitude of the portion audited; If you refer, state the division of responsibility. Whichever option you choose, your responsibility is not reduced.
Division of responsibility: If you refer → state that another auditor audited a portion, and indicate the magnitude of that portion; Magnitude is usually given as total assets, revenue or similar figures for that portion.
Cannot use other auditor's work: Work not usable + insufficient additional procedures possible → qualified opinion or disclaimer (scope limitation); Qualified if the possible effect is material but not pervasive. Disclaimer if it is material and pervasive.
Other auditor's modified report: Other auditor's modification → assess nature and significance to the whole → modify your report only if it is significant; A modification in a small portion may not require any change to your report.

How to solve Reporting, Division of Responsibility and Modified Opinions questions

Use this order for any SA 600 reporting question. It gives you provision, facts and conclusion in the form examiners reward.

1Identify the roles: who is the principal auditor, who is the other auditor, and what portion (branch, subsidiary, JV) the other auditor audited.
2Size the portion: note its share of total assets, revenue or profit. Significance drives every later decision.
3Decide whether you can use the other auditor's work. Look at their professional competence and the procedures you performed or could perform.
4If you can use it, choose how to report. You may report without reference, or refer to the other auditor and state the magnitude of the portion audited. In both cases, your responsibility is not reduced. Where the question names a specific provision, such as Section 143(3)(c) for a branch auditor's report, deal with it as well.
5If you cannot use it, ask whether you can perform sufficient additional procedures on that portion yourself.
6If you cannot, treat it as a scope limitation. Choose a qualified opinion if the possible effect is material but not pervasive, or a disclaimer if material and pervasive. This depends on the materiality of the portion on the facts given.
7If the other auditor's report is modified, assess whether the matter is significant to the whole financial statements and modify your report only if it is.
8Write the conclusion in one clear line stating the type of report and the reason.

Quickest way: Three-question test

When to use it: Use this for short MCQs and for the first line of a written answer when time is tight.

Can I use the other auditor's work? If yes, the main decision is how to report: with or without reference.
Will I refer? If yes, state the division of responsibility, the magnitude of the portion and that your responsibility is not reduced. If no, report without reference. Your responsibility is the same either way.
If I cannot use the work and cannot do more, is the possible effect material only, or material and pervasive? Qualified or disclaimer accordingly.

Common mistakes in Reporting, Division of Responsibility and Modified Opinions

Writing that reference to the other auditor reduces the principal auditor's responsibility.
The words 'division of responsibility' suggest responsibility is split.
Fix: Say that the division is only a description of who audited what. Your responsibility for the opinion on the whole remains with you.
Treating reference as always compulsory or as never allowed.
Students remember only one of the two reporting options and forget that the standard allows both once you are satisfied.
Fix: State the extant SA 600 position: when satisfied, you may report without reference or refer and state the division of responsibility, indicating the magnitude of the portion. Then add that responsibility is not reduced either way.
Giving an adverse opinion when the other auditor's work cannot be used and no extra procedures are possible.
Students link any modification with misstatement.
Fix: This is a scope limitation, not a known misstatement. The answer is qualified or disclaimer, not adverse.
Choosing between qualified and disclaimer without the pervasiveness test.
Students memorise both outcomes but not the dividing line.
Fix: Check the size and nature of the portion. Material but not pervasive gives qualified. Material and pervasive gives disclaimer.
Automatically modifying the principal auditor's report because the other auditor's report is modified.
Students treat the modification as passing upwards by default.
Fix: Assess whether the subject of the modification is significant to the financial information on which you are reporting. Modify only if it is.
Skipping the additional-procedures step.
Students jump from 'work not usable' straight to modification.
Fix: Always state that you first tried to perform sufficient additional procedures. Modify only if you could not.

Worked examples

Example 1

Case: You are the principal auditor of Sundar Ltd. Its wholly owned subsidiary, with total assets of ₹40,00,000 against consolidated total assets of ₹1,60,00,000, is audited by another auditor. You are satisfied with that auditor's competence and the work done, and you plan to rely on it. How do you report?

Show the solution

Roles: you are the principal auditor. The other auditor audited the subsidiary.
Size of the portion: ₹40,00,000 ÷ ₹1,60,00,000 = 25% of consolidated total assets.
Usability: you are satisfied with the competence and work, so you can use it. No modification arises from usability.
Reporting choice: under the extant SA 600 you have two options. Option 1: report without reference to the other auditor. Option 2: refer to the other auditor's report.
If you refer: state the division of responsibility. Say the subsidiary was audited by another auditor and give the magnitude, ₹40,00,000 of total assets, which is 25% of consolidated total assets.
Responsibility: under either option, your responsibility for the opinion on the whole is not reduced.

Answer: Because you are satisfied with the other auditor's work, you may report without reference, or refer to the other auditor and state the division of responsibility with the magnitude of the portion: ₹40,00,000 of total assets, which is 25% of the total. Under either option your responsibility for the opinion on the whole is not reduced. The opinion stays unmodified, as no limitation exists.

Example 2

Case: As principal auditor of Rao Ltd, you rely on another auditor for a branch that holds 8% of total assets and 6% of revenue. The branch deals in high-value inventory and has had unresolved reconciliation differences, so its balances are material by nature on these facts, although its size is modest. You doubt the other auditor's work and ask for their working papers, but they refuse access. You cannot perform sufficient additional procedures on the branch. The rest of the financial statements are unaffected. What is your report?

Show the solution

Usability: you doubt the work and could not satisfy yourself, so you cannot use the other auditor's work on the branch.
Additional procedures: you tried to get the working papers and could not perform enough alternative procedures on the branch.
Nature: this is a limitation on the scope of your audit, not a known misstatement. So adverse opinion is not the answer.
Materiality: at 8% of assets and 6% of revenue, size alone may not make the branch material. Here it is treated as material by nature, because of the high-value inventory and unresolved reconciliation differences. The conclusion depends on this assumption. If the branch were not material by amount or nature, no modification would be needed.
Pervasiveness: the possible effects are confined to the branch figures and the rest is unaffected, so they are material but not pervasive.
Conclusion: a qualified opinion is appropriate, with a basis for qualified opinion paragraph describing the limitation.

Answer: Give a qualified opinion ('except for the possible effects of the matter') because of the scope limitation, on the assumption that the branch is material by nature. A disclaimer would apply only if the possible effects were both material and pervasive.

Exam tips

Open every written answer with the principle: the principal auditor alone is responsible for the opinion on the whole.
In case MCQs, compute the portion's share of total assets or revenue first. Size decides significance and pervasiveness, but also check whether the portion is material by nature.
Use the phrase 'scope limitation' for the case where other auditor's work cannot be used, and name both outcomes, qualified and disclaimer, with the pervasiveness test.
State the extant SA 600 position: when satisfied, you may report without reference or refer to the other auditor and indicate the magnitude of the portion. Add that reference does not reduce your responsibility.
Do not confuse the other auditor's modified report with your own scope limitation. They lead to different questions: significance to the whole in one, pervasiveness of unobtained evidence in the other.
Keep the answer in provision, facts, conclusion form and end with the exact report type.

Practice questions from Group Audits

Reporting, Division of Responsibility and Modified Opinions in other exams

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

Reporting, Division of Responsibility and Modified Opinions: frequently asked questions

Can the principal auditor refer to the other auditor in the report?

Yes. Under the extant SA 600, if you are satisfied with the other auditor's work, you may report without reference, or refer to the other auditor's report and indicate the magnitude of the portion audited. If you refer, the report states the division of responsibility. Either way, your responsibility for the opinion is not reduced.

What does division of responsibility mean in SA 600?

It means the report says which portion of the financial information another auditor audited, and indicates the magnitude of that portion. It describes who audited what. It does not transfer your responsibility for the opinion on the whole.

What happens if the principal auditor cannot use the other auditor's work?

You first try to perform sufficient additional procedures on that portion. If you cannot, there is a limitation on scope, and you give a qualified opinion or a disclaimer of opinion depending on how pervasive the possible effect is.

Does a modified report by the other auditor always modify the principal auditor's report?

No. You consider whether the matter is significant in relation to the financial information you are reporting on. You modify your report only if it is.