The Institute of Chartered Accountants of India (ICAI) has revised Standard on Auditing (SA) 600 — 'Using the Work of Another Auditor'. The revised standard significantly changes responsibilities in group audits and brings Indian standards closer to the International Standards on Auditing (ISA) 600.
What is SA 600?
SA 600 deals with situations where a principal auditor uses the work of another auditor for components of a group financial statement. In group audit engagements — where a parent company's statutory auditor relies on subsidiary auditors — SA 600 governs the responsibilities, communications, and procedures required.
Key Changes in the Revised SA 600
The revised SA 600 introduces the concept of 'group audit' more explicitly. The group engagement partner (GEP) now has significantly more direct responsibility for the work of component auditors. There is a greater requirement for direct communication with component auditors, including access to their working papers if necessary.
Enhanced Responsibilities for Group Auditors
Group auditors can no longer merely 'refer to' component auditors without taking responsibility. The GEP must now understand the component auditor's environment, evaluate their competence, and in some cases, perform additional procedures. This is a major shift from the old regime where group auditors could disclaim responsibility for subsidiary audits.
Documentation Requirements
The revised standard requires comprehensive documentation of: group audit strategy and scoping decisions, communications with component auditors, results of procedures performed on components, and the group auditor's conclusions on component work. Audit committees and CFOs should expect more rigorous documentation requests.
Implications for Audit Committees
Audit committees of listed and large unlisted companies should understand these changes. The group auditor's report will now reflect a more comprehensive view. Audit timelines may increase as component auditors need to provide more information. Budget for audits of group entities may increase.
Our Audit Practice
Our audit practice, led by CA Pragati Goel with Big 4 experience at PwC, EY, and Deloitte, is fully equipped to handle group audit engagements under the revised SA 600. We bring institutional rigour and clear communication protocols to every group audit engagement. Contact us to discuss your group audit requirements.
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Our Audit & Assurance practice at Shahi & Co. assists businesses across New Delhi and Pan-India.