SA-600 – Using the work of another auditor

• Auditing and Assurance
• ||
• January 12, 2022

The purpose of this SA is to establish standards to be applied in situations where an auditor (hereinafter as principal auditor), reporting on the FS of an entity, uses the work of another auditor (hereinafter as another auditor) w.r.t. the financial information of one or more branches/components included in financial statements.

Key definitions

• Principal auditor- Auditor of the client.
• Another auditor- Auditor of component of client.
• Component- Any branch, division, subsidiary, JV or associates, etc., whose financial information is used in the FS of the client.

Scope
This SA deals with the responsibility of the principal auditor concerning the use of work of other auditors.

Applicability
This standard applies to material components, w.r.t. FS as a whole. Not applicable to Joint Auditors and Predecessor Auditors.

 Consideration by the principal auditor

1. The principal auditor is entitled to rely upon the work of another auditor, provided he exercised due skill and care, and there is nothing to doubt.
2. The principal auditor should guide another auditor regarding:
   • Use to be made of his report.
   • Areas requiring special consideration.
   • Time table for completion of the audit.
   • Important accounting, auditing, and reporting requirement.
3. The principal auditor should ask another auditor regarding any limitation on his work.
4. The principal auditor may require another auditor to submit a questionnaire w.r.t. work performed by him.
5. The principal auditor may require additional tests to be performed by:
   • Another auditor; or
   • Himself.
6. In the case of foreign components, he should consider another auditor’s qualifications and knowledge.
7. If there is a modification in another auditor’s report, the principal auditor should consider whether a modification in his report is required.

Co-ordination
Another auditor should also share important and relevant information with the principal auditor and properly coordinate and communicate with him.

Documentation by the principal auditor

• Components audited by another auditor;
• Audit procedures adopted and evidence obtained;
• The conclusion that particular component is not material;
• Manner of dealing with modification in another auditor’s report,

Reporting by Principal auditor
The Principal auditor should Qualify / Disclaim his audit report if he:

• Can’t use other auditor’s work procedures.
• Can’t be able to perform sufficient additional procedures.

There should be a statement of the division of responsibility in the principal auditor’s audit report by showing the extent to which the FS of component audited by another auditor has been included in the FS of the entity.

At AJSH, we assist our clients in dealing with internal audits, government audits, various corporate matters (Company incorporation, statutory audits, ROC compliance, company winding-up) in India by providing them adequate support and guidance from our end. If you have any questions or wish to know more about using the work of another auditor, kindly contact us.