The International Auditing and Assurance Standards Board (IAASB) issued the revised ISA 600 to improve quality, consistency and effectiveness of group audits.

IAS 600 introduced several important changes:

Demands regarding teams: ISA 600 emphasises the meaning of experienced team members with the right skills and knowledge to perform a quality audit.
More focus on risk analysis, both on group level and on component level, which should help identify potential material mistakes.
Improved coordination between the group auditor and component auditors: ISA 600 encourages better communication which should lead to a more effective audit process.
Requirements for documentation and files: there is more emphasis on documenting important issues identified during the audit, including assessments and conclusions.
Extensive reporting requirements: the group auditor should issue a detailed report about significant issues, materiality levels, assessed risks and important findings.

We all know this by now, of course. And we are familiar with the revised ISA 600, of course. So far, so good! Or not?

Imagine that you, as the group auditor, are confronted with differences between your local view about how an audit is conducted and the view of the component auditor in a country with some other interpretations. These first few years of the revised ISA 600 have shown us that not all supervisory boards have the same strict view on the same ISA, and therefore there may be differences in how a risk assessment is documented and the depth of the audit work that is performed.

Personally, I don’t think it is strange that there are differences between countries in how they perform audits or interpret the ISA standards, even though the ISAs are basically the same around the globe. However, not all developments move in the same pace in each country, and we must be aware and manage this situation.

Sometimes these differences in approach can lead to the group auditor performing more work, or, worst case scenario, that the differences in work performed have an impact on the group auditor’s opinion.

For instance, in the Netherlands we have our own unique and well-known interpretation of completeness of sales which mostly does not match with international views on this topic. Not easy if you are part of a group audit with a Dutch group auditor.

In conclusion, think before you do, think again while you are doing, and keep communicating.

And if you are a non-Dutch auditor, please be patient with us from the Netherlands. Thank you in advance!

Andrea van der Giezen, RA, RB, is a senior partner and a member of the board of directors of JAN©. She is also responsible for compliance and quality within the firm. Andrea has vast experience as an auditor. As well as being a Certified Public Auditor, she is also a Chartered Tax Adviser.

Christoph Magauer

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