A Guide to Audits of Group
Financial Statements and
CAS 600
CANADIAN AUDITING STANDARDS (CAS)
SEPTEMBER 2023
Audits of Group Financial Statements
Standard discussed
Canadian Auditing Standard (CAS) 600, Special Considerations – Audits of Group Financial
Statements (Including the Work of Component Auditors)
Introduction
Many audits today are audits of group financial statements (group audits). As with all audits
conducted in accordance with generally accepted auditing standards, all relevant standards apply to
group audits. Different challenges can arise in performing quality group audits, including, for example,
dealing with component auditors. CAS 600, Audits of Group Financial Statements (Including the Work
of Component Auditors), deals with the special considerations that apply to a group audit, including
in those circumstances when component auditors are involved. Revisions to CAS 600 were issued
into the CPA Canada Handbook – Assurance in August 2022. CAS 600 is effective for audits of group
financial statements for periods beginning on or after December 15, 2023.
1
,A GUIDe To AUDITS of GRoUp fINANCIAl STATemeNTS AND CAS 600
This CAS is intended to do the following:
• Encourage proactive management of quality at the group engagement level and the
component level.
• Keep the standard fit for purpose in a wide range of circumstances and in a developing
environment.
• Reinforce the need for robust communication and interactions during the group audit.
• Foster an appropriately independent and challenging skeptical mindset of the auditor.
This standard takes into account the requirements of CSQM 1, Quality Management for Firms
that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services
Engagements, and CAS 220, Quality Management for an Audit of Financial Statements, which are
intended to strengthen and improve a firm’s management of quality by focusing on the identification,
assessment and response to quality risks in a broad range of engagement circumstances.
Who Should Use This Guide, and How to Use It
We have developed this guide to assist practitioners involved in group audits – both group auditors
and component auditors. Use this guide in conjunction with other non-authoritative material,
including the following:
• August 2022 – CAS 600, Basis of Conclusions (CPA Canada Guidance Collection)
• August 2022 – Audit & Assurance Alert CAS 600: Revised standard coming into effect
• December 2022 – FAQ: Are you sure you don’t have to apply CAS 600?
This guide does not address considerations specific to network firms or firms subject to network
requirements.1 Read the Audit & Assurance Alert to learn about the changes made to CAS 600,
while the FAQ document will help you identify whether your audit engagement is a group audit
engagement and whether CAS 600 is applicable.
Terminology used in this Guide is consistent with the terms contained and defined in the Glossary
of Terms in the CPA Canada Handbook – Assurance.
Reading this guide does not replace the need to read the entire CAS 600, including the
application and other explanatory material.
1 CAS 600. A66 addresses considerations specific to network firms and firms subject to network requirements.
SEPTEMBER 2023 CANADIAN AUDITING STANDARDS (CAS) 2
,A GUIDe To AUDITS of GRoUp fINANCIAl STATemeNTS AND CAS 600
Table of Contents
Introduction 1
Who Should Use This Guide, and How to Use It 2
Scope of This CAS 5
Specific Areas Covered 6
Some Key Concepts to Keep in mind 7
Role of the Group Engagement Partner 7
Effective Two-Way Communications 7
Statutory Audits at Components 9
Documentation 10
leadership Responsibilities for managing and Achieving Quality 10
Acceptance and Continuance 11
Terms of the engagement 15
overall Group Audit Strategy and Group Audit plan 15
Considerations When Component Auditors Are Involved 18
Sufficient and appropriate involvement in the work of component auditors 18
Relevant ethical requirements 18
Engagement resources 19
Engagement performance 21
Understanding the Group and Its environment, the Applicable financial Reporting
framework and the Group’s System of Internal Control 24
Considerations When Component Auditors Are Involved 26
Matters relevant to the design or performance of risk assessment procedures 26
Matters relevant to the risks of material misstatement of the group financial
statements 26
Identifying and Assessing the Risks of material misstatement 27
Considerations When Component Auditors Are Involved 29
materiality 29
Considerations When Component Auditors Are Involved 32
SEPTEMBER 2023 CANADIAN AUDITING STANDARDS (CAS) 3
, A GUIDe To AUDITS of GRoUp fINANCIAl STATemeNTS AND CAS 600
Responding to the Assessed Risks of material misstatement 32
Consolidation process 34
Considerations When Component Auditors Are Involved 35
evaluating the Component Auditor’s Communications and the Adequacy
of Their Work 37
Communicating about matters relevant to the group auditor’s conclusion 37
Evaluating whether communications from the component auditor are adequate 37
Reviewing additional component auditor audit documentation 38
When the work of the component auditor is not adequate for the group auditor’s
purposes 39
evaluating the Sufficiency and Appropriateness of Audit evidence obtained 39
Sufficiency and appropriateness of audit evidence 39
Evaluating the effect on the group audit opinion 40
Communication with Group management and Those Charged with Governance
of the Group 41
Communication with group management 41
Matters significant to the financial statements of the entity or business unit that
forms part of the group 41
Documentation 42
About This publication 44
Consultation and Feedback 44
Appendix: What the Group Auditor Is Required to Include in the Audit
Documentation 45
Template 1: Sample letter of Instruction from Group Auditors to Component
Auditors 46
Template 2: Sample letter of Confirmation from Component Auditors to Group
Auditors 52
Template 3: Sample memorandum of Work performed from Component Auditors
to Group Auditor 54
SEPTEMBER 2023 CANADIAN AUDITING STANDARDS (CAS) 4
Financial Statements and
CAS 600
CANADIAN AUDITING STANDARDS (CAS)
SEPTEMBER 2023
Audits of Group Financial Statements
Standard discussed
Canadian Auditing Standard (CAS) 600, Special Considerations – Audits of Group Financial
Statements (Including the Work of Component Auditors)
Introduction
Many audits today are audits of group financial statements (group audits). As with all audits
conducted in accordance with generally accepted auditing standards, all relevant standards apply to
group audits. Different challenges can arise in performing quality group audits, including, for example,
dealing with component auditors. CAS 600, Audits of Group Financial Statements (Including the Work
of Component Auditors), deals with the special considerations that apply to a group audit, including
in those circumstances when component auditors are involved. Revisions to CAS 600 were issued
into the CPA Canada Handbook – Assurance in August 2022. CAS 600 is effective for audits of group
financial statements for periods beginning on or after December 15, 2023.
1
,A GUIDe To AUDITS of GRoUp fINANCIAl STATemeNTS AND CAS 600
This CAS is intended to do the following:
• Encourage proactive management of quality at the group engagement level and the
component level.
• Keep the standard fit for purpose in a wide range of circumstances and in a developing
environment.
• Reinforce the need for robust communication and interactions during the group audit.
• Foster an appropriately independent and challenging skeptical mindset of the auditor.
This standard takes into account the requirements of CSQM 1, Quality Management for Firms
that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services
Engagements, and CAS 220, Quality Management for an Audit of Financial Statements, which are
intended to strengthen and improve a firm’s management of quality by focusing on the identification,
assessment and response to quality risks in a broad range of engagement circumstances.
Who Should Use This Guide, and How to Use It
We have developed this guide to assist practitioners involved in group audits – both group auditors
and component auditors. Use this guide in conjunction with other non-authoritative material,
including the following:
• August 2022 – CAS 600, Basis of Conclusions (CPA Canada Guidance Collection)
• August 2022 – Audit & Assurance Alert CAS 600: Revised standard coming into effect
• December 2022 – FAQ: Are you sure you don’t have to apply CAS 600?
This guide does not address considerations specific to network firms or firms subject to network
requirements.1 Read the Audit & Assurance Alert to learn about the changes made to CAS 600,
while the FAQ document will help you identify whether your audit engagement is a group audit
engagement and whether CAS 600 is applicable.
Terminology used in this Guide is consistent with the terms contained and defined in the Glossary
of Terms in the CPA Canada Handbook – Assurance.
Reading this guide does not replace the need to read the entire CAS 600, including the
application and other explanatory material.
1 CAS 600. A66 addresses considerations specific to network firms and firms subject to network requirements.
SEPTEMBER 2023 CANADIAN AUDITING STANDARDS (CAS) 2
,A GUIDe To AUDITS of GRoUp fINANCIAl STATemeNTS AND CAS 600
Table of Contents
Introduction 1
Who Should Use This Guide, and How to Use It 2
Scope of This CAS 5
Specific Areas Covered 6
Some Key Concepts to Keep in mind 7
Role of the Group Engagement Partner 7
Effective Two-Way Communications 7
Statutory Audits at Components 9
Documentation 10
leadership Responsibilities for managing and Achieving Quality 10
Acceptance and Continuance 11
Terms of the engagement 15
overall Group Audit Strategy and Group Audit plan 15
Considerations When Component Auditors Are Involved 18
Sufficient and appropriate involvement in the work of component auditors 18
Relevant ethical requirements 18
Engagement resources 19
Engagement performance 21
Understanding the Group and Its environment, the Applicable financial Reporting
framework and the Group’s System of Internal Control 24
Considerations When Component Auditors Are Involved 26
Matters relevant to the design or performance of risk assessment procedures 26
Matters relevant to the risks of material misstatement of the group financial
statements 26
Identifying and Assessing the Risks of material misstatement 27
Considerations When Component Auditors Are Involved 29
materiality 29
Considerations When Component Auditors Are Involved 32
SEPTEMBER 2023 CANADIAN AUDITING STANDARDS (CAS) 3
, A GUIDe To AUDITS of GRoUp fINANCIAl STATemeNTS AND CAS 600
Responding to the Assessed Risks of material misstatement 32
Consolidation process 34
Considerations When Component Auditors Are Involved 35
evaluating the Component Auditor’s Communications and the Adequacy
of Their Work 37
Communicating about matters relevant to the group auditor’s conclusion 37
Evaluating whether communications from the component auditor are adequate 37
Reviewing additional component auditor audit documentation 38
When the work of the component auditor is not adequate for the group auditor’s
purposes 39
evaluating the Sufficiency and Appropriateness of Audit evidence obtained 39
Sufficiency and appropriateness of audit evidence 39
Evaluating the effect on the group audit opinion 40
Communication with Group management and Those Charged with Governance
of the Group 41
Communication with group management 41
Matters significant to the financial statements of the entity or business unit that
forms part of the group 41
Documentation 42
About This publication 44
Consultation and Feedback 44
Appendix: What the Group Auditor Is Required to Include in the Audit
Documentation 45
Template 1: Sample letter of Instruction from Group Auditors to Component
Auditors 46
Template 2: Sample letter of Confirmation from Component Auditors to Group
Auditors 52
Template 3: Sample memorandum of Work performed from Component Auditors
to Group Auditor 54
SEPTEMBER 2023 CANADIAN AUDITING STANDARDS (CAS) 4
