Group and Statutory Audit tailoring

Hi there! Today we are going to talk about combination of two audits (let them be G&S in this blog post): a group and statutory audit. It’s not uncommon to perform them one after in another.

Both auditors and clients want to use synergy of two audits. The value for clients to be serviced by one firm for G&S is saved company’s time/efforts spent for audit and decreased combined price. An  auditor wins by decreasing costs of doing audit and improving realisation rates. However these benefits could be jeopardised by incorrect selection of approach to materiality and scope. There is a necessity to align and methodologically tailor both type of audits. There are number of issues which might differ and impact our samples and scope: materiality, risks (as well as new risks might appear by the time statutory audit starts or whichever is going to be the second), and accounts in scope.

The problem I see here is time lag between these assignments. Sometimes it’s unclear what surprises might appear in statutory accounts after G audit. Primary team instructions and activity also play a big role here.

As in case of multilocation audits I think that methodology should be developed for the purposes of combined (G&S) audit as well.