Corporate Accounting and Auditing · Brief Introduction to Auditing Standards

SA 600 to SA 699: Using Work of Others and Audit Reporting

Updated 10 October 2026

SA 600 to SA 699 cover how an auditor relies on others (group auditors, internal auditors, experts) and how the auditor reports. You form an opinion on the financial statements, then choose unmodified, qualified, adverse or disclaimer, and add emphasis of matter, other matter or key audit matter paragraphs only where needed.

Understand SA 600 to SA 699: Using Work of Others and Audit Reporting

An audit ends with a report. The auditor's opinion deals with whether the financial statements are prepared, in all material respects, in accordance with the applicable financial reporting framework. For most general purpose frameworks, that means they give a true and fair view. SA 200 explains that the purpose of an audit is to enhance the confidence of intended users in the financial statements. The report is how that confidence is delivered.

The 600-series deals with using the work of others. In a group audit (SA 600), the group auditor is responsible for the opinion and must be involved in the work of component auditors. In SA 610, the auditor may use the work of the internal auditors, but the auditor alone is responsible for the opinion and cannot reduce that responsibility by relying on them. The auditor must judge their objectivity and competence. SA 620 covers the auditor's expert in the same way.

The 700-series covers reporting. SA 700 requires the auditor to form an opinion and set out the report in a standard structure. SA 705 applies when the opinion must be modified. SA 706 adds paragraphs that draw attention to a matter; it does not change the opinion. SA 701 requires key audit matters (KAM) to be communicated for listed entities.

Think of it as two decisions. First: is the opinion clean or modified? Modification depends on whether the misstatement or inability to get evidence is material, and whether it is pervasive. Second: does the user need extra attention drawn to something, without changing the opinion? That is where emphasis of matter, other matter and KAM come in.

Students often mix the paragraphs up. Remember: the opinion paragraph changes only under SA 705. Everything else is added around an opinion that stays as it is.

Key rules to remember

Modified opinion decision grid: Material but not pervasive → Qualified (misstatement) or Qualified (unable to obtain evidence); Material and pervasive → Adverse (misstatement) or Disclaimer (unable to obtain evidence); Cause decides the column: disagreement leads to qualified or adverse; limitation of scope leads to qualified or disclaimer. Pervasiveness decides the row.
Emphasis of Matter (SA 706): Refers to a matter already presented or disclosed in the financial statements and fundamental to users' understanding; The opinion is not modified because of it. Placed in a separate paragraph in the report.
Other Matter paragraph (SA 706): Refers to a matter NOT presented or disclosed in the financial statements that is relevant to users' understanding of the audit, the auditor's responsibilities or the report; Again, no modification of the opinion.
Key Audit Matters (SA 701): Matters of most significance in the audit of the current period, communicated to those charged with governance and reported for listed entities; KAM is not a substitute for a modified opinion and is not a separate opinion on those matters.
Internal auditors (SA 610): Auditor has sole responsibility for the opinion; use of internal auditors' work does not reduce it; Evaluate their objectivity and competence and test their work before relying on it.
Audit documentation retention (SQC 1 para 83): Retention period ordinarily no shorter than seven years from the date of the auditor's report (or later group auditor's report); Amended by the ICAI Council in August 2009 from ten years to seven.

How to solve SA 600 to SA 699: Using Work of Others and Audit Reporting questions

Quickest way: Two-question filter for reporting problems

When to use it: MCQs and short scenarios where you must pick the opinion or the paragraph.

Ask 1: Is there a material misstatement or a scope limitation? If no, the opinion stays unmodified.
If yes, ask 2: Is it pervasive? No gives qualified. Yes gives adverse (disagreement) or disclaimer (no evidence).
If the opinion stays unmodified, ask: is the matter disclosed in the financial statements and fundamental? EOM. Not disclosed but relevant? OMP.
Listed entity and a matter of most significance in the audit? KAM.

Common mistakes in SA 600 to SA 699: Using Work of Others and Audit Reporting

Modifying the opinion because of an emphasis of matter paragraph.
The word 'emphasis' sounds like a warning about a problem.
Fix: EOM never changes the opinion. It points to a disclosed matter. Only SA 705 modifies the opinion.
Saying EOM and OMP are the same.
Both sit in SA 706 and both leave the opinion unchanged.
Fix: EOM is about a matter disclosed in the financial statements. OMP is about a matter not disclosed in them.
Choosing adverse opinion for a scope limitation.
Students look only at pervasiveness and ignore the cause.
Fix: Disagreement leads to qualified or adverse. Inability to get evidence leads to qualified or disclaimer.
Saying the auditor can reduce responsibility by relying on internal auditors.
Reliance feels like sharing the work.
Fix: The auditor alone is responsible for the opinion, even when using internal auditors' work.
Treating KAM as a replacement for a qualified opinion.
Both draw attention to difficult areas.
Fix: KAM is not a substitute for a modified opinion. If the matter requires modification, SA 705 applies in addition.
Quoting a ten-year retention period for audit working papers.
Older study notes still show ten years.
Fix: SQC 1 para 83 now says ordinarily no shorter than seven years from the date of the auditor's report.

Worked examples

Example 1

During the audit of Sundaram Textiles Ltd, the auditor finds that inventory is overstated. The amount is material, but the rest of the financial statements are fairly stated. Management refuses to correct it. What opinion should the auditor give and why?

Show the solution

Cause: there is a misstatement and management disagrees, so this is a disagreement, not a scope limitation.
Materiality: the overstatement is material.
Pervasiveness: the rest of the statements are fairly stated, so the effect is confined to inventory and not pervasive.
Material but not pervasive misstatement gives a qualified opinion.

Answer: A qualified opinion ('except for') with a Basis for Qualified Opinion paragraph describing the inventory overstatement.

Example 2

Mehta Pharma Ltd, a listed company, has disclosed in a note a major fire at its main plant after year-end. The auditor is satisfied with the accounting and disclosure. Separately, the prior-year statements, presented as corresponding figures, were audited by another auditor. The current auditor is not prohibited by law from referring to that auditor's report and decides to do so. What paragraphs, if any, should the auditor add and does the opinion change?