Page 122 - AAA Integrated Workbook STUDENT S18-J19

Chapter 8 4

Joint audits

When two audit firms are appointed to provide an opinion on a set of
financial statements. They will work together planning the audit,
gathering evidence, reviewing the work and providing the opinion.

Before accepting a joint audit, the firm must consider the level of risk associated with
issuing a report alongside the other firm. The auditor's report will be signed by both
firms and they will be jointly responsible if the report is wrong.

The firm should consider the experience and quality of the other firm to ensure they
are competent.

If accepted, an engagement letter should be signed and the planning can commence
which will involve agreeing an acceptable and fair division of the workload.

Benefits

 Retention of subsidiary auditor (and therefore their cumulative audit knowledge
and experience) following acquisition.

 Availability of a wider range of resources (particularly important across national
boundaries).

 Possible efficiency improvements.

Disadvantages

 Cultural clashes.

 Difficulty setting a joint approach.

 Both firms will need to be paid a fee.

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