Let’s understand in detail about Standard on Auditing SA 600 Using the Work of Another Auditor
Introduction to SA 600 Using the Work of Another Auditor
Particular |
Detail |
Scope |
SA 600 Using the Work of Another Auditor deals with the responsibility of the principal auditor in relation to the use of work of other auditors |
Effective Date |
Applicable for all audits related to accounting periods beginning on or after April 1, 2002 |
Compatibility with ISA |
This standard is generally consistent and compatible with International Standard on Auditing 600 |
Exclusion |
Does not cover instances where two or more auditors are appointed as joint auditor and relationship with predecessor auditor |
Applicability |
This standard will not apply where the financial information of a component is immaterial and applies when several immaterial components are together material to the entity’s financial information as a whole |
1. Definition
I. Principal Auditor – “Auditor with the responsibility for reporting on the financial information of an entity when that financial information includes the financial information of one or more components audited by another auditor” II. Other Auditor– “Auditor other than the principal auditor, with the responsibility for reporting on the financial information of a component which is included in the financial information audited by the principal auditor” III. Component – “A division, branch, subsidiary, joint venture, associated enterprises or other entity whose financial information is included in the financial information audited by the principal auditor”2. Acceptance as Principal Auditor
Auditor to decide whether the auditor’s own participation is sufficient to be able to act as the principal auditor with the following consideration:i. The materiality of the portion of the financial information
ii. The degree of knowledge regarding the business of the components
iii. Risk of material misstatements of the components audited by the other auditor
iv. Performance of audit procedures per this SA regarding the components audited by the other auditor in which the principal auditor has significant participation
3. Principal Auditor’s Procedures
I. Consider the professional competence of the other auditor who is a not a member of ICAI in the context of the specific assignment II. Perform procedures to obtain sufficient appropriate audit evidence that the other auditor’s work is adequate for the principal auditor’s purpose. Principal auditor to follow the below-mentioned procedures:a. Advise the end-use of the other auditor work and report
b. Co-ordinate efforts at the planning stage
c. Inform the other auditor of areas requiring special consideration
d. Procedure for identification of inter-component transaction for disclosure
e. Time-table of audit completion
f. Significant accounting, auditing, and other requirements
g. Obtain representation for compliance
III. Discuss audit procedures applied by the other auditor or review written the summary of the findings in the form of questionnaire or checklist. IV. Nature, timing, and extent of procedures depend upon the engagement and principal auditor’s understanding of the other auditor’s professional competence. V. Consider the significant findings of the other auditor VI. Discuss the audit findings or other matters with the other auditor and the management. VII. Decide if supplemental test of the records or financial statements if necessary VIII. If the other auditor is a person other than a professionally qualified auditor, then this standards guideline assumes more importance IX. The principal auditor working paper should mention about the financial statements components audited by the other auditor (with the name) and its significance X. Document the procedures performed and conclusions reached XI. If the other auditor’s report is modified, then how qualifications or adverse remarks was dealt by the principal auditor in framing final report.