The international audit standard setter is calling for enhanced guidance and more robust requirements in ISA 600, including emphasis on professional scepticism in wake of Covid-19
To ensure that international standards on auditing (ISAs) continue to provide a foundation for high-quality global audits, the International Audit & Assurance Standards Board (IAASB) is asking for comments on its Exposure Draft, ISA 600 (Revised) Special Considerations—Audits of Group Financial Statements (Including the Work of Component Auditors).
The board is proposing more robust requirements and enhanced guidance that:
- Clarifies the scope and applicability of the standard
- Emphasises the importance of exercising professional scepticism throughout the group audit
- Clarifies and reinforces that all ISAs need to be applied in a group audit through establishing stronger linkages to the other ISAs, in particular to proposed ISA 220 (Revised), ISA 315 (Revised 2019) and ISA 330
- Focus the group engagement team’s attention on identifying and assessing the risks of material misstatement of the group financial statements and emphasizes the importance of designing and performing procedures that are appropriate to respond to those assessed risks. When component auditors are involved, the proposed standard highlights the importance of the group engagement team’s involvement in the component auditor’s work
- Reinforces the need for robust communication and interactions between the group engagement team, group engagement partner and component auditors
- Includes new guidance on testing common controls and controls related to centralised activities
- Includes enhanced guidance on how to address restrictions on access to people and information
- Enhances special considerations in other areas of a group audit, including materiality and documentation
Comments are requested by 2 October 2020.