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

During the audit of Ovalis Group, the group team finds that a component auditor's file shows significant risks were not addressed by adequate procedures. The component auditor's report on the component is clean. What should the group engagement team do under ISA 600 (Revised)?

The group team must evaluate the adequacy of the component auditor's work and communications, and if evidence is insufficient, request additional procedures or perform them itself. A clean component report is not enough. A disclaimer is a last resort if sufficient appropriate evidence still cannot be obtained.

  1. AEvaluate the component auditor's communications and work, and determine whether further evidence is needed, including requesting additional procedures or performing them itselfCorrect
  2. BAccept the clean component report because it is signed by a qualified auditor
  3. CReduce group materiality so the deficiency has no effect
  4. DDisclaim an opinion on the group financial statements immediately

Explanation

ISA 600 (Revised) requires the group team to evaluate the component auditor's communication and the adequacy of its work, and if insufficient, to request further work or perform it themselves. A clean report does not remove this duty. A disclaimer arises only if sufficient appropriate evidence cannot be obtained after these steps.

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