Group Audits & Using Others' Work

Group audits

• Group engagement partner: responsible for the group opinion.
• Evaluate component auditors: independence, competence, regulatory environment. Not independent → can't use their work.
• Component materiality < group materiality. Audit the consolidation process.
• Make reference: component audited under relevant standards, unrestricted report, same framework. Not a modification.
• Assume responsibility: no mention; more involvement.
• Statement on Auditing Standards (SAS) No. 149: risk-based group audits, periods ending on or after December 15, 2026.

Internal audit

• Evaluate objectivity, competence, systematic approach.
• External auditor makes significant judgments; sole responsibility; never eliminates own work.
• Direct assistance: no significant judgment, no high-risk areas, supervised.

Specialists

• Auditor's specialist: evaluate competence, capabilities, objectivity; evaluate work.
• Not mentioned in an unmodified report; may be mentioned to explain a modification.

Service organizations

System and Organization Controls (SOC) 1 Type 2 to reduce control risk; no reference in report.

Exam traps

• Component materiality must be lower than group materiality, and can differ from component to component.
• Direct assistance from internal auditors requires written agreement from management that they will follow the external auditor's instructions.
• If a specialist is mentioned to explain a modified opinion, the report states that this doesn't reduce the auditor's responsibility.