Arguments from the submissions that were not supportive of the content of the new Part 10

It should be focused on the complexity of the group rather than how the audit or engagement team is managed

The proposal is stringent and drew attention to concerns that it will prohibit the use of the ISA for LCEs for the auditing of groups with a structure that is not complex

The importance of guidance on how to transition from the ISA for LCEs to the full ISAs and when this should be done was highlighted

Arguments from the submissions that were not supportive the proposed prohibition of the use of the ISA for LCEs for group audits when component auditors are involved

The IAASB has a difficult task in defining the groups to be included within the scope of the ISA for LCEs

A blanket prohibition such as that proposed is likely to limit the use of the ISA for LCEs significantly in some jurisdictions, often when all other qualitative characteristics and specified criteria are met.

Physical presence was suggested to be particularly restrictive in an age when technology is enabling the performance of audits remotely

It is common for groups that are not complex to have subsidiaries situated overseas

Using component auditors situated in the same jurisdiction as the overseas subsidiary could improve the efficiency and effectiveness of a group audit, for example eliminating the need for travel and sharing the component auditors' knowledge on the overseas environment and legal requirements

Some concerns regarding the focus and wording of the prohibition and whether this may lead to a risk of inconsistencies in the different circumstances in which the standard is used

The explanatory material relating to component auditors is limited to defining a component auditor

As result of such a restrictive scope, the standard will be used in a very limited capacity, and groups with branches may not even be eligible. A more principle-based approach is preferred

Arguments from the submissions that were not supportive about the proposed group-specific qualitative characteristics

A purely qualitative view of a group and its components was preferred to a strict rules-based approach regarding the number of entities or jurisdictions

A certain number of units or a certain number of jurisdictions does not seem appropriate for the intended purpose. It was emphasized that the auditor's professional judgment should be used

The indicative numbers of entities within the group (e.g. 5 or less) or the indicative numbers of jurisdictions (e.g. 3 or less) should be removed from the standard

There should be more relevant, comprehensive examples of situations in which group audits would be considered less complex

The current example is insufficient to explain a less complex group audit

Numbers in standards are very rare, if not inexistent, and they could be taken as being imperative

The group structure and activities section should indicate that it is essential to understand relevant changes in the organizational structure

Arguments from the submissions that were suggesting changes to the content of the proposed Part 10 and related conforming amendments

CLs discussed the role of ISA 600 and its relation to the new Part 10

ISA 600 (Revised) introduces new definitions of the component auditor and engagement team, and there are already concerns about how to interpret these key definitions. These issues will affect the interpretation of the scope of group audits in the LCE standard

More application material was needed. It was argued that Part 10 does not contain guidance about the risk assessment process

Risk assessment can be dynamic and challenging in a group audit when developing an initial expectation about the potential risks of material misstatements and initial identification of significant classes of transactions and significant accounts (refer to ISA 600 Revised)

It was stated that Part 10 does not appear to include any of the specific requirements from ISA 600 regarding the group auditor's relationship with the component auditor

The IAASB should develop requirements and application material for cases in which component auditors are involved but the engagement is conducted as per the ISA for LCEs, and these should be based on the relevant requirements of ISA 600 (Revised)