Skip to content

ACCA Strategic Professional · Advanced Audit and Assurance (International) · Group audits

Brightwater Holdings has 12 subsidiaries. The group audit team is deciding how to scope the audit under ISA 600 (Revised). Which approach is consistent with the standard?

Scoping should be risk-based. The group team uses its understanding of the group, its components and the consolidation process, together with assessed risks of material misstatement, to design procedures. ISA 600 (Revised) does not require full audits of every component, does not set fixed percentage thresholds, and does not allow scoping to be delegated.

  1. ADesign and perform procedures based on an understanding of the group and its components, assessed risks of material misstatement, and the group's consolidation process, without relying on a fixed percentage of componentsCorrect
  2. BAudit every component in full because the group opinion must rest on complete audits
  3. CScope only components exceeding a fixed percentage of group revenue and ignore all others
  4. DDelegate scoping decisions entirely to component auditors who know the local entities

Explanation

ISA 600 (Revised) takes a risk-based approach to the whole group, applying ISA 315 (Revised 2019) to the group as a whole. It does not require full audits of all components and does not prescribe fixed percentage thresholds. The group engagement team must not delegate scoping and must stay responsible for the design of the procedures.

Did you get it right without looking?

One question tells you little. A timed set on Group audits shows your real accuracy, how long you take and where you lose marks.

Practise Group auditsFree diagnostic mock

More Group audits questions