On October 2, 2020, the Auditing and Assurance Standards Board (AASB) responded to the International Auditing and Assurance Standards Board’s (IAASB) Exposure Draft, International Standard on Auditing (ISA) 600 (Revised), Special Considerations – Audits of Group Financial Statements (Including the Work of Component Auditors). The exposure draft outlines more robust requirements and enhanced guidance on auditing 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. We are pleased with how the IAASB developed ED-600 after determining the foundational principles of conducting a risk-based audit. We believe that developing ISA 315 (Revised), Identifying and Assessing the Risks of Material Misstatement and the proposed quality management standards were important first steps to building ED-600.
Our letter encourages the IAASB to consider adding further clarity and guidance regarding the involvement of component auditors in conducting risk assessment procedures. Furthermore, we request that the IAASB considers developing a more comprehensive approach to the use of audit evidence from audits performed for other purposes.