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

During acceptance of Orrin Group, the group engagement partner learns that management of a significant subsidiary, Orrin Trading, has restricted access to its records and its component auditor, so that the group team cannot be involved in the component auditor's work. Management says the group's other components are unaffected. Which course of action is most consistent with ISA 600 (Revised) and ISA 210?

If management's restrictions mean sufficient appropriate evidence cannot be obtained and a disclaimer of opinion would be expected, the auditor should not accept the group engagement, unless law requires it. Accepting then giving an unmodified opinion, or sharing responsibility with the component auditor, is not permitted.

  1. AAccept, and issue an unmodified opinion because the restriction is imposed before acceptance
  2. BAccept, and refer to the component auditor in the audit report to share responsibility
  3. CAccept the engagement but decline to audit the consolidation adjustments
  4. DNot accept the engagement as a group audit if the restriction is expected to result in a disclaimer of opinion, unless law requires acceptance; otherwise consider the effect of the limitation on the opinionCorrect

Explanation

If the group engagement partner concludes that sufficient appropriate evidence cannot be obtained due to restrictions, and this is expected to lead to a disclaimer, the engagement should not be accepted (unless required by law). A pre-acceptance restriction does not avoid a modified opinion, and referring to a component auditor does not divide responsibility under ISA 600 (Revised).

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