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Canadian Auditing Standards

Group Audits

Summary

Many audits today are audits of group financial statements – also known as group audits – these types of engagements can be very challenging.

Staff Contact(s)

Birender Gill, CPA, CA Principal, Auditing and Assurance Standards Board

Project Status

  • Information gathering

    Completed prior to 2016

  • Approving project

    The IAASB approved project proposal in December 2016

  • Engaging Communities

    Exposure Draft issued May 11, 2020

    Consultation activities took place between May and September 2020

  • Deliberating feedback

    IAASB has deliberated feedback received on the Exposure Draft

  • Final pronouncement

    AASB approved the final standard in March 2022

    CAS 600 issued in Handbook in August 2022

AASB response to the IAASB Exposure Draft on Audits of Group Financial Statements

Our response letter highlights our support for the proposed changes, which clarify many of the issues raised by stakeholders regarding the extant ISA 600.

News


April 26, 2022

News

Update: AASB approves revised CAS 600, Special Considerations - Audits of Group Financial Statements

At the March 7-8, 2022, Board meeting, the AASB approved CAS 600, Special Considerations – Audits of Group Financial Statements (Including the Work of Component Auditors), subject to the PIOB’s due process approval. The PIOB has now confirmed due process for ISA 600 (revised) and the IAASB has released ISA 600 (revised). CAS 600 will become effective for audits of group financial statements for periods beginning on or after December 15, 2023. CAS 600 is anticipated to be issued in the Handbook in August 2022.

May 11, 2020

Document for Comment

AASB Exposure Draft – Audits of Group Financial Statements (Including the Work of Component Auditors)

The AASB issued an Exposure Draft proposing the adoption of ISA 600 (Revised), with appropriate Canadian amendments. Stakeholders are invited to comment until September 11, 2020. For full details, visit the Document for Comment page.

May 1, 2020

International Activity

IAASB Exposure Draft – ISA 600, Audits of Group Financial Statements

The International Auditing and Assurance Standards Board (IAASB) issued its Exposure Draft, ISA 600, Special Considerations – Audits of Group Financial Statements (Including the Work of Component Auditors). Comments are due to the IAASB on October 2, 2020.

October 25, 2017

International Activity

IAASB Releases ISA 600 Project Update

October 25, 2017. The IAASB has issued an update for its project to revise ISA 600, Special Considerations – Audits of Group Financial Statements (Including the Work of Component Auditors). This publication highlights the issues under consideration in the revision of this standard and other current projects.

Meeting & event summaries


April 12, 2022

AASB Decision Summary – March 7-8, 2022

The AASB discussed an issue Canadian stakeholders raised about how the scope of revised CAS 600, Special Considerations – Audits of Group Financial Statements (Including the Work of Component Auditors), applies to financial information of pension plans that are included in financial statements of public sector entities, such as provinces. The Board concluded that a Canadian amendment was not necessary.

CAS 600 contains one Canadian amendment to align the illustrative report in Appendix I of the standard to CAS 700, Forming an Opinion and Reporting on Financial Statements. The AASB unanimously agreed that re-exposure of CAS 600 was not necessary since of the Canadian amendment was contemplated in the Exposure Draft and stakeholders raised no concerns.

The AASB unanimously approved CAS 600 and the related conforming amendments to other CASs and OCSs, subject to the Public Interest Oversight Board’s due process approval of ISA 600 in April 2022.

CAS 600 will become effective for audits of group financial statements for periods beginning on or after December 15, 2023.

Once the AASOC confirms that the AASB followed due process with proper regard for the public interest, the final standard and the related conforming amendments will be issued in the Handbook in August 2022. 

February 8, 2022

AASB Decision Summary – November 29-30, 2021

The AASB discussed issues related to the IAASB’s project to revise ISA 600, Special Considerations – Audits of Group Financial Statements (Including the Work of Component Auditors). Key issues discussed included:

  • further clarification required of the actions the group auditor considers when communications from the component auditor are not adequate for the group auditor’s purposes;
  • clarifying the requirement regarding the group auditor communicating with component auditors matters that the group auditor or component auditor determines to be relevant to the design of responses to the assessed risks of material misstatement;
  • support for retaining the sentence outlining the expectation that component auditor audit documentation does not need to be replicated in the group auditor file;
  • a review of the conforming and consequential amendments related to ISA 600;
  • a review of the disposition of comments showing how issues raised in the AASB’s response letter to the ISA 600 exposure draft were addressed; and
  • implementation risks and plan to develop guidance to support the implementation of CAS 600.

The IAASB is expected to approve ISA 600 (Revised) at the December 2021 meeting. The AASB would approve CAS 600 in early 2022.

September 9, 2021

AASB Decision Summary – September 9-10, 2021

The AASB discussed issues related to the IAASB’s project to revise ISA 600, Special Considerations – Audits of Group Financial Statements (Including the Work of Component Auditors). Key issues discussed included:

  • the need for guidance on using audit evidence from an audit conducted for statutory purposes, whether already completed or being performed; and
  • how the group auditor determines whether, and to what extent, to review parts of the component auditor audit documentation.

The IAASB is expected to approve ISA 600 (Revised) at its December 2021 meeting. The AASB would approve CAS 600 in early 2022.

June 29, 2021

AASB Decision Summary – June 7-8, 2021

The AASB provided input to the IAASB members from Canada on issues related to the IAASB’s project to revise ISA 600, Special Considerations – Audits of Group Financial Statements (Including the Work of Component Auditors). Key issues discussed included:

  • clarifying the application of the risk-based approach in a group audit engagement;
  • documenting the group auditor’s determination that component auditors have the competence, capabilities, and sufficient time to perform the engagement; and
  • removing the requirement related to using audit evidence from an audit performed for another purpose and including a general paragraph on this topic in the introduction of the standard.

December 15, 2020

AASB Decision Summary – November 30 – December 1, 2020

The AASB provided input to the IAASB members from Canada on issues related to the IAASB’s project to revise ISA 600, Special Considerations – Audits of Group Financial Statements (Including the Work of Component Auditors).

Key issues discussed included:

  • clarifying the scope of the proposed standard as it relates to entities with branches or divisions;
  • explaining the group engagement teams’ determination of components for planning and performing the group audit;
  • enhancing the linkages to
    • ISA 315 (Revised 2019), Identifying and Assessing the Risks of Material Misstatement;
    • ISA 330, The Auditor’s Responses to Assessed Risks; and
    • ISA 220 (Revised), Quality Management for an Audit of Financial Statements;
  • strengthening the guidance on involving component auditors and their role in a group audit; and
  • removing the concept of significant components in the proposed standard.

September 23, 2020

AASB Decision Summary – September 9-10 and 23, 2020 Meetings

The AASB reviewed stakeholder feedback on its Exposure Draft, “Audits of Group Financial Statements (Including the Work of Component Auditors),” including the results of comprehensive outreach and consultation activities, such as field testing the proposed standard. The Board also reviewed draft responses to the International Auditing and Assurance Standards Board (IAASB) questions in its Exposure Draft of proposed International Standard on Auditing 600 (Revised), Special Considerations – Audits of Group Financial Statements (Including the Work of Component Auditors) and Proposed Conforming and Consequential Amendments to Other ISAs.

The response letter will be submitted to the IAASB by the comment deadline of October 2, 2020.

April 20, 2020

AASB Decision Summary – April 20, 2020

The AASB unanimously approved an exposure draft of Canadian Auditing Standard (CAS) 600, Special Considerations – Audits of Group Financial Statements (Including the Work of Component Auditors). The exposure draft is based on the IAASB’s exposure draft of proposed revisions to International Standard on Auditing (ISA) 600. The exposure draft is expected to be issued in early May 2020, with a comment deadline of September 4, 2020.

March 9, 2020

AASB Decision Summary — March 9-10, 2020

The AASB provided input to the IAASB members from Canada on issues related to proposed revisions to ISA 600, Special Considerations – Audits of Group Financial Statements (Including the Work of Component Auditors). Issues discussed included:

  • key terms defined in the standard;
  • proposed scope of the standard;
  • requirements and application material related to materiality; and
  • the length of the exposure draft comment period and the planned outreach activities.

The IAASB expects to approve an exposure draft of proposed ISA 600 (Revised) at its March 2020 meeting. The AASB expects to approve its exposure draft of proposed CAS 600, Special Considerations – Audits of Group Financial Statements (Including the Work of Component Auditors) in April 2020.

December 23, 2019

AASB Decision Summary — December 2-3, 2019

The AASB provided input to the IAASB members from Canada on issues related to proposed revisions to International Standard on Auditing (ISA) 600, Special Considerations – Audits of Group Financial Statements (Including the Work of Component Auditors). Issues discussed included:

  • key terms defined in the standard;
  • requirements and application material related to materiality;
  • appropriate responses to assessed risks of material misstatement;
  • evaluating the sufficiency and appropriateness of audit evidence obtained; and
  • documentation requirements.

The IAASB expects to approve an exposure draft in March 2020. The AASB will continue to discuss this project at future meetings.

September 10, 2019

AASB Decision Summary – September 9-10, 2019 Meeting

The AASB provided input to the IAASB members from Canada on issues related to the IAASB’s project to revise International Standard on Auditing (ISA) 600, Special Considerations — Audits of Group Financial Statements (Including the Work of Component Auditors). The Board discussed:

  • using the “consolidation process” as a basis for determining whether an entity or business unit is a component;
  • including a requirement for the group engagement partner to review the overall audit strategy;
  • the importance of aggregation risk;
  • component materiality; and
  • various access issues at the component level related to people and information.

The AASB will continue to discuss this project at future meetings.

June 10, 2019

AASB Decision Summary — June 10-11, 2019

The AASB provided input to the IAASB members from Canada about the IAASB’s project to revise ISA 600, Special Considerations — Audits of Group Financial Statements (Including the Work of Component Auditors). The Board discussed:

  • public interest issues;
  • use of the risk-based approach for planning and performing an audit of group financial statements;
  • proposed definitions of component, group financial statements and consolidation;
  • proposed structure and scope of revised ISA 600; and
  • proposed changes to the engagement acceptance and continuance and planning considerations.

The Board will continue to discuss this project at future meetings.

March 4, 2019

AASB Decision Summary — March 4-5, 2019

The AASB provided input to the International Auditing and Assurance Standards Board (IAASB) members from Canada on the IAASB’s project to revise International Standard on Auditing (ISA) 600, Special Considerations — Audits of Group Financial Statements (Including the Work of Component Auditors). The Board discussed:

  • the use of a top-down, risk-based approach to scoping group audits;
  • definitions of component, significant component and group engagement team; and
  • the need for further clarification of component materiality considerations.

The Board will continue to discuss this project at future meetings.

Disclaimer

This project summary has been prepared for information purposes only. Decisions reported are tentative and reflect only the current status of discussions on this project, which may change after further Board deliberations. Decisions to publish Handbook material are final only after a formal voting process.