Main key points
- Revised ISA 600 strengthens group-level planning and risk assessment.
- Group engagement partner oversight and coordination expectations are more explicit.
- Component auditor competence, capability, and objectivity require clearer evaluation.
- Materiality allocation across components needs balanced, well-supported judgement.
- Consolidation and intercompany eliminations remain high-risk and require robust audit trails.
Group audits continue to present unique challenges for auditors, particularly with the evolving requirements under International Standard on Auditing (ISA) 600, which now includes important revisions. As organisations expand across multiple jurisdictions and entities, auditors must meet comprehensive and often complex requirements for group financial statements. ISA 600 provides guidance for auditors overseeing the consolidation of financial information from parent companies and subsidiaries.
2026 focus: Audit quality, transparency, and professional judgement are under greater scrutiny—so evidence of effective group-wide oversight matters more than ever.
The revised standard mandates a more rigorous approach to identifying and evaluating risks, assessing group-wide controls, and overseeing auditors involved in components. In 2026, these updated requirements are more critical than ever, with greater scrutiny on audit quality, transparency, and the application of professional judgement.
The Role of ISA 600 in Group Audits
ISA 600 outlines the procedures and responsibilities for auditors when auditing group financial statements, helping ensure the financial statements reflect the group’s financial position. The standard helps auditors navigate complexities such as intercompany transactions, cross-border regulations, and different accounting policies across entities. The revised ISA 600 places a stronger emphasis on risk-based planning and procedures across the entire group, reflecting the increasingly intricate nature of multi-location audits.
A more holistic group-level risk assessment is required, rather than focusing only on component-level risks.
Group auditors must demonstrate how component work supports the group opinion and addresses group-wide risks.
A key change is the focus on a broader group-level understanding. The group auditor must understand the group structure and incorporate all components, including those not directly audited by the lead auditor. This wider scope supports identification of group-wide risks, considering both component and consolidation risks.
Key Areas of Focus under the Revised ISA 600
Group Auditor’s Responsibilities
ISA 600 requires the group auditor to gain a thorough understanding of the group’s internal control systems and how they operate across components. The group auditor must ensure appropriate audit evidence is obtained from component auditors, particularly where multiple firms are involved. This includes evaluating component auditors’ work and ensuring it aligns with the group audit strategy.
The revised standard places increased emphasis on the group engagement partner, who must oversee, guide, and maintain continuous oversight of the group audit. This approach requires group auditors to evaluate not only component risks but also the consolidated impact on group financial statements, supported by effective coordination and communication.
Evaluating Component Auditors’ Work
A common challenge in group audits is ensuring component auditor work is suitable for the group audit opinion. Revised ISA 600 provides more clarity on assessing component auditors’ competence, capabilities, and objectivity, and ensuring evidence is adequate and relevant. Where concerns arise, the group auditor may need to perform additional procedures to address gaps.
The revised standard also emphasises avoiding extremes in allocating materiality across components. If materiality is set too high or too low, audit risk increases. Group auditors should apply reasonable benchmark multiples to determine an upper bound for component materiality and support judgements consistently.
Risk of Material Misstatement
ISA 600 continues to stress the importance of identifying and evaluating risks of material misstatement at both group and component levels. This includes fraud risks and risks linked to consolidation adjustments. A risk-based approach should ensure component risks are addressed appropriately and aligned with group-level risk assessment.
Consolidation and Intercompany Transactions
The consolidation process and elimination of intercompany transactions require careful scrutiny. Group auditors must ensure eliminations and consolidation adjustments are accurate to avoid overstating revenues, expenses, assets, or liabilities. Revised ISA 600 reinforces the importance of understanding consolidation adjustments and ensuring they are supported by robust evidence and audit trails.
Cross-Border and Jurisdictional Considerations
Multi-jurisdiction group audits require awareness of local auditing standards, tax laws, and reporting regulations. ISA 600 requires an understanding of how local variations can impact the group audit. The revised standard requires broader consideration of cross-border risks, ensuring they do not compromise the integrity of consolidated financial statements.
Governance and Audit Oversight
ISA 600 continues to highlight the importance of governance in a thorough audit process. Audit committees play a key role in overseeing progress, addressing challenges, and ensuring follow-up on issues. Senior management should ensure work across components is aligned with governance frameworks and supports audit quality and compliance.
Audit Implications for Group Audits
The revisions to ISA 600 have significant implications for audit approach and documentation. Group audits now require a deeper understanding of group-wide risks and procedures extending beyond individual components. External reviewers and regulators will focus on whether the group auditor has properly addressed risk assessment, component auditor oversight, and consolidation adjustments. Failure to apply revised principles can result in audit quality concerns, increased scrutiny, and potential regulatory consequences.
Conclusion: Effective Group Auditing in 2026
In 2026, the evolving role of ISA 600 requires auditors to be more attuned to dynamic group structures and cross-border complexity. Organisations should prioritise strong internal controls—particularly around risk identification and management across subsidiaries. Auditors should enhance group-wide risk-based planning, strengthen communication across jurisdictions, and scrutinise intercompany transactions and consolidation with greater precision.
To remain effective, group auditors must be vigilant in assessing risks at both group and component levels, and they must provide stronger oversight of component auditors. With increasing complexity and rising expectations, the revised ISA 600 supports audits that deliver transparent, reliable group reporting—backed by documented judgement and robust governance.