ISA 600 546
INTERNATIONAL STANDARD ON AUDITING 600
USING THE WORK OF ANOTHER AUDITOR
(This Standard is effective)∗
CONTENTS
Paragraph
Introduction .................................................................................................... 1-5
Acceptance as Principal Auditor .................................................................... 6
The Principal Auditor’s Procedures ............................................................... 7-14
Cooperation Between Auditors ...................................................................... 15
Reporting Considerations ............................................................................... 16-17
Division of Responsibility ............................................................................. 18
International Standard on Auditing (ISA) 600, “Using the Work of Another Auditor”
should be read in the context of the “Preface to the International Standards on Quality
Control, Auditing, Review, Other Assurance and Related Services,” which sets out
the application and authority of ISAs.
∗ ISA 600 has been revised. The IAASB’s clarity drafting conventions have been applied to the revised
ISA. ISA600 (Revised and Redrafted), “Special Considerations―Audits of Group Financial Statements
(Including the Work of ComponentAuditors)” can be found in Part II of the Handbook of International
Auditing, Assurance, and Ethics Pronouncements. It is effective for audits of group financial statements
for periods beginning on or after December 15, 2009.
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Introduction
1. The purpose of this International Standard on Auditing (ISA) is to establish
standards and provide guidance when an auditor, reporting on the financial
statements of an entity, uses the work of another auditor on the financial
information of one or more components included in the financial statements of
the entity. This ISA does not deal with those instances where two or more
auditors are appointed as joint auditors nor does it deal with the auditor’s
relationship with a predecessor auditor. Further, when the principal auditor
concludes that the financial statements of a component are immaterial, the
standards in this ISA do not apply. When, however, several components,
immaterial in themselves, are together material, the procedures outlined in this
ISA would need to be considered.
2. When the principal auditor uses the work of another auditor, the
principal auditor should determine how the work of the other auditor will
affect the audit.
3. “Principal auditor” means the auditor with responsibility for reporting on the
financial statements of an entity when those financial statements include
financial information of one or more components audited by another auditor.
4. “Other auditor” means an auditor, other than the principal auditor, with
responsibility for reporting on the financial information of a component which
is included in the financial statements audited by the principal auditor. Other
auditors include affiliated firms, whether using the same name or not, and
correspondents, as well as unrelated auditors.
5. “Component” means a division, branch, subsidiary, joint venture, associated
company or other entity whose financial information is included in financial
statements audited by the principal auditor.
Acceptance as Principal Auditor
6. The auditor should consider whether the auditor’s own participation is
sufficient to be able to act as the principal auditor. For this purpose the
principal auditor would consider:
(a) The materiality of the portion of the financial statements which the
principal auditor audits;
(b) The principal auditor’s degree of knowledge regarding the business of
the components;
(c) The risk of material misstatements in the financial statements of the
components audited by the other auditor; and
(d) The performance of additional procedures as set out in this ISA
regarding the components audited by the other auditor resulting in the
principal auditor having significant participation in such audit.
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The Principal Auditor’s Procedures
7. When planning to use the work of another auditor, the principal auditor
should consider the professional competence of the other auditor in the
context of the specific assignment. Some of the sources of information for
this consideration could be common membership of a professional
organization, common membership of, or affiliation, with another firm or
reference to the professional organization to which the other auditor belongs.
These sources can be supplemented when appropriate by inquiries with other
auditors, bankers, etc. and by discussions with the other auditor.
8. The principal auditor should perform procedures to obtain sufficient
appropriate audit evidence, that the work of the other auditor is adequate
for the principal auditor’s purposes, in the context of the specific
assignment.
9. The principal auditor would advise the other auditor of:
(a) The independence requirements regarding both the entity and the
component and obtain written representation as to compliance with
them;
(b) The use that is to be made of the other auditor’s work and report and
make sufficient arrangements for the coordination of their efforts at the
initial planning stage of the audit. The principal auditor would inform
the other auditor of matters such as areas requiring special
consideration, procedures for the identification of intercompany
transactions that may require disclosure and the timetable for
completion of the audit; and
(c) The accounting, auditing and reporting requirements and obtain written
representation as to compliance with them.
10. The principal auditor might also, for example, discuss with the other auditor
the audit procedures applied, review a written summary of the other auditor’s
procedures (which may be in the form of a questionnaire or checklist) or
review working papers of the other auditor. The principal auditor may wish to
perform these procedures during a visit to the other auditor. The nature, timing
and extent of procedures will depend on the circumstances of the engagement
and the principal auditor’s knowledge of the professional competence of the
other auditor. This knowledge may have been enhanced from the review of
previous audit work of the other auditor.
11. The principal auditor may conclude that it is not necessary to apply procedures
such as those described in paragraph 10 because sufficient appropriate audit
evidence previously obtained that acceptable quality control policies and
procedures are complied with in the conduct of the other auditor’s practice.
For example, when they are affiliated firms the principal auditor and the other
auditor may have a continuing, formal relationship providing for procedures
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that give that audit evidence such as periodic inter-firm review, tests of
operating policies and procedures and review of working papers of selected
audits.
12. The principal auditor should consider the significant findings of the other
auditor.
13. The principal auditor may consider it appropriate to discuss with the other
auditor and the management of the component, the audit findings or other
matters affecting the financial information of the component and may also
decide that supplementary tests of the records or the financial information of
the component are necessary. Such tests may, depending on the
circumstances, be performed by the principal auditor or the other auditor.
14. The principal auditor would document in the audit working papers the
components whose financial information was audited by other auditors, their
significance to the financial statements of the entity as a whole, the names of
the other auditors and any conclusions reached that individual components are
immaterial. The principal auditor would also document the procedures
performed and the conclusions reached. For example, working papers of the
other auditor that have been reviewed would be identified and the results of
discussions with the other auditor would be recorded. However, the principal
auditor need not document the reasons for limiting the procedures in the
circumstances described in paragraph 11, provided those reasons are
summarized elsewhere in documentation maintained by the principal auditor’s
firm.
Cooperation Between Auditors
15. The other auditor, knowing the context in which the principal auditor will
use the other auditor’s work, should cooperate with the principal auditor.
For example, the other auditor would bring to the principal auditor’s attention
any aspect of the other auditor’s work that cannot be carried out as requested.
Similarly, subject to legal and professional considerations, the other auditor
will need to be advised of any matters that come to the attention of the
principal auditor which may have an important bearing on the other auditor’s
work.
Reporting Considerations
16. When the principal auditor concludes that the work of the other auditor
cannot be used and the principal auditor has not been able to perform
sufficient additional procedures regarding the financial information of the
component audited by the other auditor, the principal auditor should
express a qualified opinion or disclaimer of opinion because there is a
limitation in the scope of the audit.
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17. If the other auditor issues, or intends to issue, a modified auditor’s report, the
principal auditor would consider whether the subject of the modification is of
such a nature and significance, in relation to the financial statements of the
entity on which the principal auditor is reporting, that a modification of the
principal auditor’s report is required.
Division of Responsibility
18. While compliance with the guidance in the preceding paragraphs is considered
desirable, the local regulations of some countries permit a principal auditor to
base the audit opinion on the financial statements taken as a whole solely upon
the report of another auditor regarding the audit of one or more components.
When the principal auditor does so, the principal auditor’s report should
state this fact clearly and should indicate the magnitude of the portion of
the financial statements audited by the other auditor. When the principal
auditor makes such a reference in the auditor’s report, audit procedures are
ordinarily limited to those described in paragraphs 7 and 9.
Public Sector Perspective
1. The basic principles in this ISA apply to the audit of financial statements in the
public sector, however, supplementary guidance on additional considerations
when using the work of other auditors in the public sector is needed. For
example, the principal auditor in the public sector has to ensure that, where
legislation has prescribed compliance with a particular set of auditing
standards, the other auditor has complied with those standards. In respect to
public sector entities, the Public Sector Committee1 has supplemented the
guidance included in this ISA in its Study 4, “Using the Work of Other
Auditors—A Public Sector Perspective.”
1 In November 2004 the Public Sector Committee’s name was changed to the International Public Sector
Accounting Standards Board.