Page 63 - CA Final PARAM Digital Book.

Answer ➢ Clear understanding of the role of such auditor and the company’s auditor/ Proper rapport
between these two auditors

When the accounts of the branch are audited by a person other than the company’s auditor, there
is need for a clear understanding of the role of such auditor and the company’s auditor in relation
to the audit of the accounts of the branch and the audit of the company as a whole; also, there is
great necessity for a proper rapport between these two auditors for the purpose of an effective
audit. In recognition of these needs, the Council of the Institute of Chartered Accountants of India
has dealt with these issues in SA 600, “Using the Work of another Auditor”.

➢ Special circumstances
Visit – law may give right to visit & examine books of account / Principal auditor
would normally be entitled to rely upon the work of other auditor unless there are
special circumstances requiring visit & examination of books

In certain situations, the statute governing the entity may confer a right on the principal
auditor to visit a component and examine the books of account and other records of the
said component, if he thinks it necessary to do so. Where another auditor has been
appointed for the component, the principal auditor would normally be entitled to rely upon
the work of such auditor unless there are special circumstances to make it essential for him
to visit the component and/or to examine the books of account and other records of the
said component

Mandatory Procedures – arrangement for co-ordination / use of work of other
auditor / areas requiring special consideration / intercomponent transactions /
timetable --- advise & obtain representation as to compliance to accounting, auditing
and reporting requirements

When using the work of another auditor, the principal auditor should ordinarily perform the
following procedures:
• advise the other auditor of the use that is to be made of the other auditor's work
and report and make sufficient arrangements for coordination of their efforts at
the planning stage of the audit. The principal auditor would inform the other
auditor of matters such as areas requiring special consideration, procedures for
the identification of intercomponent transactions that may require disclosure and
the time-table for completion of audit; and

• advise the other auditor of the significant accounting, auditing and reporting
requirements and obtain representation as to compliance with them.

Discretionary Procedures --- Discussion / Summary / Check List / Visit
The principal auditor might discuss with the other auditor the audit procedures applied or
review a written summary of the other auditor’s procedures and findings which may be in
the form of a completed questionnaire or check-list. The principal auditor may also wish to
visit the other auditor.

Need not apply above 4 procedures – S&A evidence that acceptable quality
The principal auditor may conclude that it is not necessary to apply procedures such as
those described in above paragraph because sufficient appropriate audit evidence
previously obtained that acceptable quality control policies and procedures are complied
with in the conduct of other auditor's practice.

(NTE – Circumstances / Principal Auditor’s Knowledge / Professional Competence of
Other Auditor)
The nature, timing and extent of procedures will depend on the circumstances of the
engagement and the principal auditor's knowledge of the professional competence of the
other auditor. This knowledge may have been enhanced from the review of the previous
audit work of the other auditor.

SA 230 and SQC 1
Further, SA 230 issued by ICAI on Audit Documentation, and “Standard on Quality Control
(SQC) 1, “Quality Control for Firms that Perform Audits and Reviews of Historical Financial
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