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

Marlow LLP is group auditor of Tessen Group. Tessen's subsidiary in Country Z is audited by Kito & Partners, a firm unknown to Marlow. Under ISA 600 (Revised), what must the group engagement team do in relation to Kito before involving them?

The group team must obtain an understanding of the component auditor's compliance with relevant ethical requirements including independence, and of its competence and capability, along with how far the group team can be involved. Local regulation or management assurances do not replace this, and the group auditor stays responsible for the opinion.

  1. ANothing, because the component auditor is subject to local law and so is presumed competent
  2. BObtain an understanding of whether the component auditor understands and will comply with relevant ethical requirements, including independence, and has the competence and capability to perform the work, and of the extent of involvement possibleCorrect
  3. CRequire Kito to sign the group audit report as joint auditor
  4. DAsk Tessen's management to certify that Kito is competent

Explanation

ISA 600 (Revised) requires the group team to understand the component auditor's ethics and independence compliance, competence and capabilities, and how far it can be involved in their work. Local licensing does not remove this duty, and management certification is not a substitute. The group auditor retains sole responsibility for the group opinion.

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