Joint Audit and Joint Auditors
A joint audit is an audit of financial statements of an entity by two or more auditors appointed with the objective of issuing the audit report. Such auditors are described as joint auditors.
Audit Planning, Risk Assessment and Allocation of Work
1) The joint auditors shall jointly establish an overall audit strategy that sets the scope, timing and direction of the audit, and that guides the development of the audit plan
2) The engagement partner and other key members of the engagement team from each of the joint auditors shall be involved in planning the audit. In developing the joint audit plan, the joint auditors shall:
a) Identify division of audit areas and common audit areas amongst the joint auditors. After allocation of work, the work allocation document shall be signed by all the joint auditors and the same shall be communicated to TCWG.
b) Ascertain the reporting objectives of the engagement to plan the timing of the audit and the nature of the communications required;
c) Consider and communicate among all joint auditors the factors that, in their professional judgment, are significant in directing the engagement team’s efforts;
d) Consider whether knowledge gained on other or similar engagements performed earlier by the respective engagement partner(s) for the entity is relevant.
e) Ascertain the nature, timing and extent of resources necessary to perform the engagement.
Responsibility and Co-ordination among Joint Auditors
1) In respect of audit work divided among the joint auditors, each joint auditor shall be responsible only for the work allocated to such joint auditor including proper execution of the audit procedures.
2) All the joint auditors shall be jointly and severally responsible for:
a) the audit work which is not divided among the joint auditors and is carried out by all joint auditors;
b) decisions taken by all the joint auditors under audit planning in respect of common audit areas concerning the nature, timing and extent of the audit procedures to be performed by each of the joint auditors.
c) matters which are brought to the notice of the joint auditors by any one of them and on which there is an agreement among the joint auditors.
d) examining that the financial statements comply with the requirements of the relevant statutes;
e) presentation and disclosure of the financial statements as required by the AFRFW;
f) ensuring that the audit report complies with the requirements of the relevant statutes, the applicable Standards on Auditing and the other relevant pronouncements issued by ICAI.
3) Where, in the course of the audit, a joint auditor comes across matters which are relevant to the areas of responsibility of other joint auditors, the said joint auditor shall communicate the same to all the other joint auditors in writing prior to the completion of the audit.
4) It shall be the responsibility of each joint auditor to determine the nature, timing and extent of audit procedures to be applied in relation to the areas of work allocated to said joint auditor. It is the individual responsibility of each joint auditor to study and evaluate the prevailing system of internal control and assessment of risk relating to the areas of work allocated to said joint auditor.
Audit Conclusion and Reporting
1) The joint auditors are required to issue common audit report, however, where the joint auditors are in disagreement with regard to the opinion or any matters to be covered by the audit report, they shall express their opinion in a separate audit report. A joint auditor is not bound by the views of the majority of the joint auditors.
2) In such circumstances, the audit report(s) issued by the joint auditor(s) shall make a reference to the separate audit report(s) issued by the other joint auditor(s). Further, separate audit report shall also make reference to the audit report issued by other joint auditors. Such reference shall be made under the heading “Other Matter Paragraph
Assumption related to work of Joint Auditor
Each joint auditor is entitled to assume that:
1) The other joint auditors have carried out their part of the audit work and the work has actually been performed in accordance with the Standards on Auditing issued by the ICAI. It is not necessary for a joint auditor to review the work performed by other joint auditors or perform any tests in order to ascertain whether the work has actually been performed in such a manner.
2) The other joint auditors have brought to said joint auditor’s notice any departure from AFRFW or significant observations that are relevant to their responsibilities noticed in the course of the audit.