ASA 600 (Revised) Audits of a Group Financial Report (Including the Work of Component Auditors) / ISA (NZ) 600 (Revised) Special Considerations – Audits of Group Financial Statements (Including the Work of Component Auditors) includes new and revised requirements and application material that better aligns the standard with recently revised standards such as ASQM 1 / PES 3, ASA / ISA (NZ) 220 (Revised) and ASA / ISA (NZ) 315 (Revised 2019). The revised standard is effective for audits of financial statements with reporting periods starting on or after 15 December 2023, with early adoption allowed. If you are the group auditor or the auditor of a component, branch, division or shared service centre, it is important to understand the changes so you can assess the impact on your audits going forward and update your methodologies to comply with the new requirements.

The main changes are designed to:

Encourage proactive management of quality: To align with the changes to ASA / ISA (NZ) 315 (Revised) the standard now takes a risk-based approach to group engagements. This includes a greater focus on identifying and assessing the risks of material misstatement and on planning the approach to obtaining sufficient appropriate audit evidence (what, when and by whom). There are clarifications around how ASA / ISA (NZ) 220 (Revised) applies to group audit engagements (including direction and supervision and resources), how materiality and aggregation risk apply to group audits and how to deal with restricted access to information and people.

Keep the standard fit for purpose: More clarity has been provided on the scope of the standard with revised introductory paragraphs, definitions and application material that deal with when the standard applies to branches and divisions, shared service centres and non-controlled entities. The importance of the group auditor reviewing the work of component auditors has been highlighted. There is also more information on documentation and reinforcement that all ASAs / ISAs (NZ) apply to group audits.

Reinforce the need for robust communications and interactions: The revised standard highlights and clarifies the importance of two-way communication between the group auditor and the component auditors and other aspects of the group auditor’s interactions with the component auditors.

Emphasise professional scepticism: There is more focus on professional scepticism through the revised standard.

The message we have heard from members is that the new standard may apply to more audits than the extant standard. But there is a range of resources available to assist firms with the implementation of the revised standard.