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

Kestrel Group has a subsidiary in a country where its auditor, Dunmore LLP, is not a member of the group auditor's network. Dunmore's local firm does not use the group's quality management policies. Which action best reflects the group engagement team's obligations under ISA 600 (Revised) when deciding to use Dunmore's work?

The group team should understand the non-network component auditor's competence, capabilities and compliance with relevant ethical requirements including independence, then decide how to direct, supervise and review its work. Mere local licensing or management representations are not sufficient evidence.

  1. AAccept the work because the local firm is licensed to audit in its jurisdiction
  2. BObtain an understanding of Dunmore's competence, capabilities and relevant ethical requirements, including independence, and consider how to direct and review its workCorrect
  3. CReplace all the component's work with analytical procedures by the group team
  4. DRely on the component's management representation letter instead of reviewing the auditor's work

Explanation

The group team must understand the component auditor, including competence, capabilities, independence and the relevant ethical requirements, and then determine the nature, timing and extent of involvement. Local licensing alone is not enough. Management representations do not replace the group team's own evaluation.

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