Understanding SSA 600 in Group Audits: A Guide for Singapore Companies

Understanding SSA 600 in Group Audits: A Guide for Singapore Companies

When a group of companies operates under a parent-subsidiary structure, it becomes essential to present consolidated financial statements that provide a complete and transparent view of the group’s financial position. In Singapore, such consolidated audits must be conducted in accordance with the Singapore Standards on Auditing (SSA). Specifically, SSA 600 – Special Considerations—Audits of Group Financial Statements (Including the Work of Component Auditors) is the cornerstone standard governing group audits.

Whether you’re a CFO managing a corporate group or a business owner looking to ensure compliance, this article will help you understand what SSA 600 entails, its importance in group audits, the responsibilities of the group auditor, and how businesses in Singapore can align with this standard.

What is SSA 600?

SSA 600 is part of the suite of Singapore Standards on Auditing, issued by the Accounting and Corporate Regulatory Authority (ACRA) and aligned closely with the International Standards on Auditing (ISA). SSA 600 applies specifically to audits of group financial statements, including when components of the group are audited by different auditors.

In essence, SSA 600 provides the guidance and requirements for group auditors when:

Auditing consolidated financial statements of a parent company and its subsidiaries.
Relying on the work of component auditors, either in Singapore or overseas.

This standard ensures that despite the complexity and multiple parties involved, the group auditor maintains overall responsibility for the group audit opinion.

Why SSA 600 Matters in Singapore

In Singapore’s corporate environment, group structures are common across industries such as construction, real estate, finance, and logistics. Many of these companies have multiple subsidiaries, sometimes located in different countries. As a result, group audits often involve collaboration between multiple audit teams or firms.

SSA 600 becomes critical in such cases because:

It ensures uniform quality across all parts of the group audit.
It establishes clear responsibilities for the group engagement partner.
It provides a framework for evaluating and relying on component auditor work.
It supports compliance with ACRA’s audit quality expectations.

Key Definitions in SSA 600

To understand SSA 600, it’s important to grasp the following terms:

Group: A parent and all its subsidiaries.
Component: An entity or business unit whose financial information is included in the group financial statements.
Component Auditor: An auditor who performs audit work on a component but is not part of the group audit engagement team.
Group Engagement Partner: The auditor responsible for the group audit and the audit opinion.

Responsibilities of the Group Auditor under SSA 600

SSA 600 places the primary responsibility for the group audit on the group engagement team—regardless of how many component auditors are involved. The group auditor must:

1. Determine Overall Group Audit Strategy

This includes:

Understanding the group structure
Identifying significant components
Setting materiality levels for each component
Planning the extent of involvement with component auditors

2. Evaluate Component Auditors

If the group auditor is not auditing certain components, SSA 600 requires them to evaluate:

The independence and competence of the component auditors
Their understanding of SSA and relevant regulations
Their willingness to cooperate and share audit documentation

3. Communicate Clearly

The group auditor must provide component auditors with:

Clear instructions on audit scope
Materiality thresholds
Reporting format
Deadlines and documentation requirements

4. Assess the Work of Component Auditors

Upon receiving the component auditors’ findings, the group auditor must:

Evaluate whether sufficient and appropriate audit evidence was obtained
Review any significant issues or risks identified
Determine if further audit procedures are needed at the group level

5. Conclude and Report

Finally, the group auditor issues the audit opinion on the consolidated financial statements, taking full responsibility for the entire group audit, even when relying on other auditors’ work.

Planning the Group Audit under SSA 600

Planning is the foundation of an effective group audit. Key planning steps include:

Understanding the group’s business operations
Assessing consolidation processes and internal controls
Identifying risks of material misstatement at both group and component levels
Deciding the nature, timing, and extent of group engagement team involvement in the work of component auditors

For example, in the case of a Singapore company with subsidiaries in Malaysia and Indonesia, the group auditor may need to:

Visit foreign subsidiaries or engage local component auditors
Translate foreign financials to Singapore Dollars
Ensure consistency in applying Singapore Financial Reporting Standards (SFRS)

When Component Auditors Are Involved

Component auditors can add both value and complexity to a group audit. SSA 600 provides detailed guidance for working with component auditors effectively:

Component Significance

Significant components (due to size or risk) require full scope audits.
Non-significant components may be subject to analytical procedures or limited reviews.

Engagement and Documentation

The group auditor must ensure:

There’s clear two-way communication with the component auditor
All audit evidence is properly reviewed and documented
Any difficulties encountered by component auditors are addressed

Situations That Require Special Attention

Components in high-risk jurisdictions
Component auditors using different accounting frameworks
Restrictions on access to component information (e.g., legal barriers or language differences)

SSA 600 and Singapore Regulatory Expectations

Singapore’s regulators, including ACRA and the Public Accountants Oversight Committee (PAOC), are increasingly focused on audit quality in group engagements. In its Practice Monitoring Programme (PMP), ACRA frequently reviews whether group auditors:

Have performed sufficient work on consolidation adjustments
Have adequately reviewed component auditor outputs
Have maintained proper documentation and audit trail

A lack of compliance with SSA 600 could result in audit failures, reputational risks, or penalties.

Practical Tips for Singapore Companies

If your business prepares group consolidated accounts, here are some recommendations:

Work with an experienced audit firm that understands SSA 600 and has handled group audits across borders.
Maintain strong internal documentation for intercompany transactions and consolidations.
Coordinate early with subsidiaries and their respective auditors to ensure smooth audit execution.
Ensure consistent accounting policies across all group companies.
Anticipate regulatory scrutiny—especially if you operate in regulated industries or have foreign entities.

At Koh & Lim Audit PAC, we have extensive experience with SSA 600 group audits. Our team ensures proper planning, execution, and communication, whether you’re managing a regional group or a multinational structure.

Conclusion

In a world where companies are more interconnected than ever, the role of SSA 600 in group audits cannot be overstated. It sets the framework for audit quality, accountability, and transparency in the preparation and examination of consolidated financial statements.

For businesses in Singapore with subsidiaries or complex group structures, aligning your audit process with SSA 600 is not just about compliance—it’s about building stakeholder trust and sustaining long-term growth.

To learn more or speak to a group audit specialist, visit Koh & Lim Audit PAC today.

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