Group audits: component and other auditor work
Distinguish supervision from divided responsibility and apply the issuer or nonissuer terminology and requirements stated in the facts.
The decision that earns the point
Identify the engagement facts and governing framework
Group-audit responsibility depends on the stated framework and reporting approach. In a PCAOB audit, a lead auditor can supervise another auditor under AS 2101 and AS 1201, or can divide responsibility with a referred-to auditor under AS 1206 when its conditions are met. A nonissuer group audit uses AU-C 600 terminology and requirements.
Exam use
AUD can test component risk, lead-auditor eligibility and involvement, other-auditor supervision, referred-to-auditor conditions and report reference, and the separate AU-C 600 nonissuer model.
Your scratch-paper plan
Solve it in three moves
- 1
Select the group-audit model
Distinguish PCAOB supervision, PCAOB divided responsibility, and the AICPA nonissuer group-audit model before assigning responsibility.
PCAOB AS 2101: Audit Planning - 2
Connect component work to risk
Set scope, communication, involvement, review, and evaluation based on component risks rather than a percentage alone.
PCAOB AS 1201: Supervision of the Audit Engagement - 3
Use the matching report treatment
Do not refer to another auditor under a supervision model or claim undivided responsibility when AS 1206 divided responsibility is used.
PCAOB AS 1206: Dividing Responsibility for the Audit with Another Accounting Firm
Worked problem
Work the facts before choosing the answer
CPAPass illustration assumptions: this is a PCAOB issuer audit in which the lead auditor uses another auditor under AS 2101 and AS 1201 without dividing responsibility. A component holds 35 percent of group inventory and has a newly identified valuation risk.
CPAPass original exam illustration using stated assumptions
Show the work
The percentage does not determine the work by itself. The lead auditor evaluates whether it can serve as lead, communicates the valuation risk and required work, determines risk-responsive involvement, and reviews and evaluates the other auditor's work.
Rule source: PCAOB AS 2101: Audit PlanningAnswer
Use the component work in the group conclusion only after the lead auditor obtains sufficient appropriate evidence under the supervision model. Do not refer to the other auditor in the report as if responsibility were divided.
Rule source: PCAOB AS 2101: Audit PlanningDo it now
Test the same decision with a fresh question
Start with free AUD practice. Create an account only when you want the 5-day no-card CPAPass trial and continued section practice.
The trap and the repair
Common trap
Assuming another auditor's report or a component percentage automatically supplies sufficient group evidence ignores risk, direction, supervision, and evaluation.
Repair
Name the group-audit model first, then connect every significant group risk to communicated work, lead-team involvement, review, and report treatment.
Group-audit model map
Supervision, divided responsibility, and AU-C 600 are not synonyms
The selected model controls terminology, involvement, responsibility, and whether the report refers to another firm.
| Model | Auditor relationship | Report boundary | Authority |
|---|---|---|---|
| PCAOB supervision | Lead auditor directs, supervises, reviews, and evaluates an other auditor | Lead auditor does not divide responsibility or refer as under AS 1206 | PCAOB AS 1201: Supervision of the Audit Engagement |
| PCAOB divided responsibility | Lead auditor uses a referred-to auditor when AS 1206 conditions are met | Report must make the required reference and identify the division | PCAOB AS 1206: Dividing Responsibility for the Audit with Another Accounting Firm |
| AICPA nonissuer group audit | Group engagement partner and component auditor under AU-C 600 | Apply AU-C 600 responsibility and reporting, not PCAOB labels | AICPA AU-C 600: Special Considerations - Audits of Group Financial Statements |
After a miss
Repair a group-audit model miss
- 1
Write PCAOB supervision, PCAOB divided responsibility, or AU-C 600 before evaluating component work.
- 2
Rework the inventory illustration under AS 1206 and identify every terminology and report change.
- 3
Answer a fresh AUD group question and tie each component risk to scope, communication, involvement, evidence, and report treatment.
Your exam workflow
- Step 1Read the requirementIdentify what the task asks you to decide about group audits cpa exam.
- Step 2Sort the factsDistinguish PCAOB supervision, PCAOB divided responsibility, and the AICPA nonissuer group-audit model before assigning responsibility.
- Step 3Apply the ruleSet scope, communication, involvement, review, and evaluation based on component risks rather than a percentage alone.
- Step 4Check the outputDo not refer to another auditor under a supervision model or claim undivided responsibility when AS 1206 divided responsibility is used.
Keep the next step narrow
Quick questions
What is the shortest useful answer for group audits cpa exam?
Group-audit responsibility depends on the stated framework and reporting approach. In a PCAOB audit, a lead auditor can supervise another auditor under AS 2101 and AS 1201, or can divide responsibility with a referred-to auditor under AS 1206 when its conditions are met. A nonissuer group audit uses AU-C 600 terminology and requirements.
How can group audits cpa exam appear on the CPA Exam?
AUD can test component risk, lead-auditor eligibility and involvement, other-auditor supervision, referred-to-auditor conditions and report reference, and the separate AU-C 600 nonissuer model. The exact task can change, so identify the governing facts before applying the rule.
What is the most common mistake with group audits cpa exam?
Assuming another auditor's report or a component percentage automatically supplies sufficient group evidence ignores risk, direction, supervision, and evaluation. Name the group-audit model first, then connect every significant group risk to communicated work, lead-team involvement, review, and report treatment.
Where should I practice group audits cpa exam?
After the worked example, use AUD practice for a fresh question that requires the same decision. If the miss depends on audit planning and risk response, review that handoff before trying another set.
How should I review group audits cpa exam after a missed question?
Write PCAOB supervision, PCAOB divided responsibility, or AU-C 600 before evaluating component work. Rework the inventory illustration under AS 1206 and identify every terminology and report change. Answer a fresh AUD group question and tie each component risk to scope, communication, involvement, evidence, and report treatment.