TWSA600 Special Considerations—Audits of Group Financial Statements

Status

Issued by Auditing and Assurance Standards Committee in Taiwan on 26 November, 2024

Summary

This Standard deals with special considerations that apply to an audit of group financial statements (a group audit), including in those circumstances when component auditors are involved.

The group engagement partner remains ultimately responsible and therefore accountable for compliance with the requirements of this Standard. Nevertheless, the group engagement partner may seek assistance from others to fulfill these responsibilities.

The group engagement partner shall:

(a) take overall responsibility for managing and achieving quality on the group audit engagement.

(b) before accepting or continuing the group audit engagement, determine whether sufficient appropriate audit evidence can reasonably be expected to be obtained to provide a basis for forming an opinion on the group financial statements.

The group auditor shall:

(a) establish, and update as necessary, an overall group audit strategy and group audit plan;

(b) take responsibility for obtaining an understanding of the following:

     (1) the group and its environment;

     (2) the applicable financial reporting framework and the consistency of accounting policies and
           practices across the group; and

     (3) the group’s system of internal control;

(c) based on the understanding obtained in (b), take responsibility for the identification and assessment of the risks of material misstatement of the group financial statements, including with respect to the consolidation process;

(d) when classes of transactions, account balances or disclosures in the group financial statements are disaggregated across components, for purposes of planning and performing audit procedures, determine the component performance materiality and the threshold above which misstatements identified in the component financial information are to be communicated to the group auditor;

(e) take responsibility for the nature, timing and extent of further audit procedures to be performed, including determining the components at which to perform further audit procedures and the nature, timing and extent of the work to be performed at those components;

(f) request the component auditor to communicate matters relevant to the group auditor’s conclusion with regard to the group audit;

(g) take responsibility for performing procedures, including, as appropriate, requesting component auditors to perform procedures, designed to identify events that may require adjustment of, or disclosure in, the group financial statements;

(h) evaluate whether sufficient appropriate audit evidence has been obtained from the audit procedures performed, including from the work performed by component auditors, on which to base the group audit opinion;

(i) communicate with group management an overview of the planned scope and timing of the audit, including an overview of the work to be performed at components of the group; and

(j) prepare audit documentation for a group audit engagement that is sufficient to enable an experienced auditor, having no previous connection with the audit, to understand the nature, timing and extent of audit procedures performed, the evidence obtained, and the conclusions reached with respect to significant matters arising during the group audit.

When making reference to the audit of a referred-to auditor in the auditor’s report on the group financial Statements, the group engagement partner shall:

(a) take responsibility for the following:

      (1) referred-to auditors having been made aware of relevant ethical requirements that are
           applicable given the nature and circumstances of the group audit engagement; and

      (2) confirming whether the referred-to auditors understand and will comply with the ethical
            requirements that are relevant to the group audit engagement, including those related to
            independence;

(b) determine that referred-to auditors have the appropriate competence and capabilities;

(c) having obtained an understanding of the referred-to auditor, determine whether to make reference to the audit of a referred-to auditor in the auditor’s report on the group financial statements. Reference to the audit of a referred-to auditor in the auditor’s report on the group financial statements should not be made unless:

     (1) the group engagement partner has determined that the referred-to auditor has performed an
           audit of the financial statements of the component in accordance with the relevant requirements
           of the laws and Auditing Standards applicable in the R.O.C; and

     (2) the referred-to auditor has issued an auditor’s report that is not restricted as to use; and

(d) communicate to a referred-to auditor on a timely basis and evaluate a referred-to auditor’s communication.

When component auditors are involved in the group audit, no reference shall be made to the component auditor in the auditor’s report on the group financial statements.

The group may have a non-controlling interest in an entity that is accounted for by the equity method and for which audited financial statements of the non-controlled entity are available. If the group auditor intends to use the audited financial statements as audit evidence regarding the non-controlled entity’s financial results, the group auditor shall obtain and read the audited financial statements of the non-controlled entity, including the accompanying audit report, and determine whether the audited financial statements are satisfactory for this purpose.

Effective date

This Standard is effective for audits of financial statement for periods ending on or after June 30, 2025.