AU-C 600 Special Considerations—Audits of Group Financial Statements (Including the Work of Component Auditors)

A. Introduction

1. Scope: This section addresses special considerations that apply to group audits, in particular those that involve component auditors.
2. To think about a group audit consider an example—a parent company that has three subsidiaries.
a. Parent company is required to have an audit report on its overall consolidated financial statements (assume your firm will issue that report). Parent company is composed of Subsidiaries A, B and C.
b. Subsidiaries A and B are audited by your firm (the group engagement team or group auditor).
c. Subsidiary C is audited by another auditor (the component auditor).
d. The issues here are largely about the group auditor’s responsibilities with respect to the work performed by the component auditor and issuing the audit report on the overall parent company financial statements (which include the subsidiaries).
3. The group audit team and component auditors collectively possess the appropriate competence and capabilities. The group engagement partner is responsible for the direction, supervision and performance for the group audit.
4. The overall purpose here is to obtain sufficient appropriate audit evidence on the entire entity.
5. The group engagement partner is responsible for deciding, individually for each component, to either
a. Assume responsibility for the work of a component auditor.
b. Not assume responsibility for ...

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