Relevant AICPA Guidance The relevant AICPA guidance is provided by AU 600, Special Considerations—Audits of Group Financial Statements (Including the Work of Component Auditors). The standard states that the auditor's objectives are to determine whether to act as the auditor of the group financial statements, and, if so, (1) to determine whether to make reference to the audit of the component auditor; (2) to communicate clearly with component auditors; and (3) to obtain sufficient appropriate audit evidence regarding the financial information of the components and the consolidation process to express an opinion on the group financial statements.

Definitions Component: An entity for which group or component management prepares financial information that is required by the applicable financial reporting framework to be included in the group financial statements. Component Auditor: An auditor who performs work on the financial information of a component that will be used as audit evidence for the group audit. (A component auditor may be part of the group engagement partner's firm, a network-affiliated firm, or another unrelated firm.) Group: All the components whose financial information is included in the group financial statements. A group always has more than one component. Group Financial Statements: Financial statements that include the financial information of more than one component. This term also refers to combined financial statements aggregating the financial information prepared by components that are under common control. Group-Wide Controls: Controls designed, implemented, and maintained by group management over group financial reporting. Significant Component: A component identified by the group engagement team that (a) is of individual financial significance to the group; or (b) due to its specific nature, is likely to include significant risks of material misstatement of the group financial statements.