ACCA AAA ^INT Syllabus D. Audit of Historical Financial Information - Joint Audits - Notes ^{8 / 8}

There are several advantages and disadvantages in a joint audit being performed

• Advantages

  • Efficiency

    The subs auditor will have a good understanding of the business / controls etc so working together will help the principal auditor catch up quicker

    This is a key issue, as the principal auditor needs a thorough understanding of the subsidiary also for risk assessment

  • Resources

    A joint audit allows sufficient resources to be allocated to the subs audit, assuring the quality of the opinion given

  • Quality

    Both auditors can discuss contentious issues together 

    Often a ‘fresh pair of eyes’ helps. 

    It should be easier to challenge management and therefore ensure that the auditors’ position is taken seriously

• Disadvantages

  • More expensive for the client

    From a cost/benefit point of view there is clearly no point in paying twice for one opinion to be provided. 

    Despite the audit workload being shared, both firms will have a high cost for being involved in the audit in terms of senior manager and partner time

  • Different audit approaches

    Problems could arise in deciding which firm’s method to use, for example, to calculate materiality, sample sizes  etc 

    One firm’s methods may dominate, eliminating the benefit of a joint audit being conducted

  • Working Together

    There may be problems for the two audit firms to work together harmoniously

  • Joint Liability

    Both firms are jointly liable

    They could, however, blame each other, making the litigation process more complex

    However, it could be argued that joint liability is not necessarily a drawback, as the firms should both be covered by professional indemnity insurance.