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

Kestrel & Co is considering appointment as group auditor of Alder Holdings, which has 12 subsidiaries. Before accepting, the group engagement partner must be satisfied that sufficient appropriate evidence can reasonably be expected to be obtained. Under ISA 600 (Revised), which factor is most directly relevant to this acceptance decision?

The key acceptance factor is whether the group engagement team can expect to obtain sufficient appropriate evidence, which depends on access to component information, management and component auditors. Network membership or the number of components does not decide acceptance; inability to get access would mean declining.

  1. AWhether the group engagement team will be able to obtain access to information at components and to component auditors or component managementCorrect
  2. BWhether all components are audited by firms in the same network as Kestrel & Co
  3. CWhether the group has more than ten components in total
  4. DWhether the group financial statements were prepared under the same framework as the previous year's parent-only statements

Explanation

ISA 600 (Revised) requires the group engagement partner to determine whether sufficient appropriate audit evidence can reasonably be expected to be obtained, including through access to component information, management and auditors. Network membership of component auditors and the number of components are not conditions for acceptance. A lack of access that cannot be overcome would require declining the engagement.

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