The Exposure Draft, Proposed SAS Special Considerations — Audits of Group Financial Statements (Including the Work of Component Auditors and Audits of Referred-to Auditors), would supersede SAS No. 122, Statements on Auditing Standards: Clarification and Recodification, as amended, section 600, Special Considerations – Audits of Group Financial Statements (Including the Work of Component Auditors), and amend various SASs; SSAE No. 18, Attestation Standards: Clarification and Recodification, as amended, section 105, Concepts Common to All Attestation Engagements; and the proposed Quality Management standards.
The Auditing Standards Board has developed this proposed SAS to strengthen the auditor’s approach to planning and performing a group audit and to improve the quality of group audits by doing the following:
Clarifying and reinforcing that all applicable AU-C sections need to be applied in a group audit engagement. It does this by establishing stronger linkages to the other AU-C sections, in particular, to proposed SAS Quality Management for an Engagement Conducted in Accordance With Generally Accepted Auditing Standards (proposed QM SAS); AU-C section 315, Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement; and AU-C section 330, Performing Audit Procedures in Response to Assessed Risks and Evaluating the Audit Evidence Obtained.
Including subsections in each section of the proposed SAS that describe the requirements that apply when component auditors are involved, helping to emphasize and clarify the interactions that are needed between the group auditor and component auditors, as well as helping to enhance the scalability of the proposed SAS (The proposed SAS notes that a referred-to auditor is not a component auditor).
Providing greater clarity on the scope and applicability of the proposed SAS, including through enhancements to the definition of group financial statements.
The proposed SAS would become effective for audits of group financial statements for periods ending on or after December 15, 2026.