NFRA issues Revised Standards on Auditing SA 600 for Public Comments

The National Financial Reporting Authority ( NFRA ) has issued the revised Standards on Auditing ( SA ) 600, titled “Special Considerations— Audits of Group Financial Statements ( Including the Work of Component Auditors )” for public comments. This revised standard addresses the specific considerations that arise in audits of group financial statements, where multiple auditors may be involved in different components of the group.

This standard, primarily applicable to Public Interest Entities ( PIEs ) under Rule 3 of the NFRA Rules 2018, excludes Public Sector Undertakings ( PSUs ), Public Sector Banks ( PSBs ), Public Sector Insurance companies ( PSIs ), and their branches. It sets out detailed guidelines for group auditors to effectively coordinate and supervise component auditors involved in the audit process, ensuring sufficient audit evidence is obtained across all components of the group.

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Official Link: Comments are invited on proposed revision in SA 600 | National Financial Reporting Authority

The revised SA 600 provides an in-depth framework on various aspects, including:

– Defining the roles and responsibilities of the group engagement partner and the group auditor.

– Emphasising professional scepticism throughout the audit process.

– Introducing specific measures for the involvement, direction, and supervision of component auditors to mitigate audit risks, particularly aggregation risk and detection risk.

– Addressing the consolidation process for the preparation of group financial statements, including adjustments and reclassifications across components.

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Key points in the revised standard include a focus on scalability, allowing the standard to be adapted to group audits of different sizes and complexities. It also outlines the responsibilities of the group engagement partner, ensuring quality management, adherence to ethical standards, and effective communication across all parties involved.

Stakeholders and the public are encouraged to submit their feedback on the revised SA 600 by October 30, 2024. Comments can be submitted through the NFRA website, where the accompanying note provides further details on the submission process.

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