Anvendelse af ISA 600 ved revision af mindre holdingselskaber

Emina Jakupovic & Christina M. H. Schaadt

Student thesis: Master thesis

Abstract

The purpose of this thesis is to examine if the state-authorized public accountants perform the audit of small holding companies in the same way and in accordance with ISA 600. In the Danish Company Accounts Act and the Companies Act we have identified issues that may affect the audit of holding companies. In compliance with the Danish Company Accounts smaller companies have the opportunity to opt out audit. This means the group auditor can experience that a subsidiary or an associate has opt out audit. A subsidiary or an associate could have a different financial year and finally there are different methods of adding them into the holding’s annual report Both laws distinguish between decisive and significant influence. This distinction has a big impact on the remedies that the holding company has over the company in question and may also affect the audit. If the holding company does not have decisive influence it can have the consequence that the group audit will not gain access to sufficient information in order to perform the audit. Next we conducted a review of the elements of ISA 600 which should be applied to audit of holding companies. We have evaluated the essential element to be the distinction between significant components and not significant components since it affects whether to audit or not. It is also important that the group auditor is involved in the audit of the components. The group audit has full responsibility of the annual report of the holding company regardless of there are component auditors involved or not. Therefore the group auditor must obtain knowledge of the component auditor and must be involved in the entire audit – from risk assessment and determination of the materiality to evaluation the audit evidence. Based on the challenges mentioned above we have prepared a number of questions that we have asked five difference state-authorized accountants. Finally we have analyzed the responses received. We have found that only two of the five respondents perform the audit in accordance with ISA 600. The others do so only partly. We believe it is linked to the fact that two of the respondents stated directly that they do not believe that ISA 600 is intended for smaller holding companies but only large corporations. The main difference in their responses referred to the identification of significant components. Three of the respondents would not use a benchmark as ISA 600 prescribe but will instead do so out on materiality considerations. We assess this as a major weakness. First of all there is a risk that too many components will be classified as significant components and therefore should be audited in full scope. Secondly there is a risk that they are not able to identify components that are significant due to the fact that the component is likely to include significant risk of material misstatement due to its specific nature or circumstances.

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
LanguageDanish
Publication date2012
Number of pages142