ISA 600 Revised (adopted in Poland as KSB 600(Z)) replaced the old ISA 600 and applies to group audits commencing from 1 January 2025. The standard strengthens the group auditor's responsibility for the entire audit process — from planning through documentation. For CFOs this means more detailed questions from the auditor, higher documentation requirements in the consolidation process, and more active communication between the group auditor and subsidiary auditors. Groups with disorganised accounting policies and inconsistent consolidation packages will feel this directly in the cost and duration of the audit.
Does this apply to your group?
ISA 600 Revised applies if you meet at least one of the following conditions:
- You prepare consolidated financial statements as a parent entity
- You are a subsidiary in a group subject to mandatory consolidated audit
- Your financial year began on or after 1 January 2025
- You have subsidiaries in different jurisdictions (particularly relevant)
- The group audit has previously been conducted by a different auditor than the parent's auditor
If your group is subject to statutory audit and the financial year matches the calendar year — ISA 600 Revised applies to the audit of 2025 financial statements, which is being conducted now.
Opportunities and risks for your company
| If you act | If you don't act |
|---|---|
| Unified accounting policy across the group → lower cost of component audits | Group auditor expands scope of procedures → higher cost and longer audit duration |
| Consistent consolidation packages → fewer auditor questions, smoother process | Inconsistent data between components → consolidation adjustments challenged by the auditor |
| Good documentation of eliminations and reconciliations → faster audit completion | Poor documentation → auditor extends procedures at subsidiaries |
| Early communication with group auditor → no surprises at the final stage | Reactive approach → auditor findings just before the reporting deadline |
Background — why the standard changed
The old ISA 600 was criticised for years. Three main objections: excessive formalisation of the component approach, insufficient integration of local auditors' work with the group auditor, and limited documentation of genuine oversight over the consolidation process.
The IAASB conducted a revision. The new standard shifts the focus: from formal component size criteria to risk assessment. It simultaneously strengthens the role of the group auditor as the genuine coordinator of the entire process — not merely an aggregator of partial results.
How it works in practice
The new standard introduces three concrete changes that a CFO will feel directly:
Change 1 — Materiality per component, not per group level
The group auditor must now establish performance materiality separately for each component or procedure. The scope of work is proportional to risks — it need not include a full audit of every subsidiary, but must be justified by a risk analysis, not just balance sheet size.
What this means: A small subsidiary handling a key related-party contract may be subject to a full audit, even if it represents only 3% of the group's total assets.
Change 2 — Mandatory communication with component auditors
ISA 600 Revised formalises communication: the group auditor must send detailed instructions to subsidiary auditors, receive reports on their work and document an assessment of their competence and independence. This is not optional — it is a documentation requirement.
What this means: If your subsidiary has a local auditor not accustomed to reporting to the group auditor in a specific format — friction and delays will emerge.
Change 3 — Strengthened professional scepticism
The group auditor is now required to maintain particular vigilance regarding information from different levels of management — especially when parent and subsidiary management present inconsistent data.
Most common errors the auditor will find
- No unified accounting policy across the group — subsidiaries apply different depreciation rates, different capitalisation thresholds, different inventory valuation policies. The group auditor must reconcile these, which costs time for both parties.
- Consolidation packages inconsistent with group policy — data sent by subsidiaries is in local format, without mapping to the group chart of accounts. Result: manual adjustments at consolidation that are not documented.
- Undocumented intragroup transactions — balance and turnover reconciliations between group companies exist in emails or Excel, without a formal confirmation procedure. Under ISA 600 Revised the auditor must document or challenge this.
- No assessment of local auditors' competence — if you are a parent with subsidiaries audited by local firms, the group auditor is now required to assess their qualifications and independence. Without your cooperation this is impossible.
Frequently asked questions
What to do within 30 days
- Review your accounting policy documentation — is there a single unified policy for the whole group, or does each company have its own?
- Check the format of your consolidation packages — do subsidiaries report in a format compatible with the group auditor's requirements?
- Contact the group auditor before the season — ask about instructions for component auditors and the communication plan.
- Document the intragroup transaction elimination procedure — this will be the first area of questions.
Want to discuss how this topic applies to your company?
Book a short consultation with a statutory auditor and assess which risks or actions may apply to your situation.