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A88674 1 (2006-07-31)

handle is hein.gao/gaobadvwj0001 and id is 1 raw text is: SG A O Comptroller General .. . Accountability - Integrity Relability of the United States United States Government Accountability Office Washington, DC 20548 July 31, 2006 Mr. James M. Sylph Technical Director International Auditing and Assurance Standards Board 545 Fifth Avenue, 14'h Floor New York, NY 10017 Subject: Proposed International Standard on Auditing (ISA) 600, The Audit of Group Financial Statements Dear Mr. Sylph: This letter provides the U.S. Government Accountability Office's (GAO) comments on the revised exposure draft of the International Auditing and Assurance Standards Board's (IAASB) proposed International Standard on Auditing (ISA) 600, which was issued in March 2006. GAO commends the IAASB's efforts to strengthen the standards and guidance for group audits. We support strengthening the audit procedures performed by the group auditor in a group audit situation. We also believe that the most recent exposure draft is more clearly written and better organized than the prior exposure draft. We are pleased to see that the IAASB incorporated some of the comments in our letter dated August 2, 2005. For example, we agree with your decision to eliminate the distinction between related and unrelated auditors. However, some of the comments in our previous letter still apply to this revised exposure draft. Most important, we continue to strongly disagree with the IAASB's decision to eliminate the distinction between sole and divided responsibility among auditors. In our August 2, 2005, letter, we expressed serious concern about whether the proposed standard would be viable in audits of large, complex, and diverse entities. We have particular concerns about the implications for large public sector entities, such as national and state governments. For instance, given the size and complexities of the U.S. government as well as large state and local governments, it is frequently impractical, inefficient, or uneconomical for group auditors to review the other auditors' workpapers or to perform significant other procedures on the financial information of the component that was audited by other auditors. In addition, there may be circumstances in which the group auditors decide, regardless of any other considerations, to make reference in their reports to the audits of other auditors in order to clearly indicate the division of responsibility. In the United States, over 90 percent of the 50 state auditors make reference in their reports to other auditors for certain component entities that are included in the financial statements of the state

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