ISA 600 revised   

With the audit season in full swing, many companies are now encountering the revised ISA 600 for the first time. Effective for financial periods starting on or after 15 December 2023, this updated standard is guiding how group audits are conducted for the 2024 financial year. As auditors begin applying the new approach, you may already be seeing the first signs: more questions, earlier involvement and deeper coordination across group entities. Now is the time to understand what has changed and what it means for your group’s audit in practice. 

What is ISA 600(r)? 

ISA 600 (revised) is the international auditing standard that governs audits of group financial statements (those that include multiple entities or operations). In the Netherlands, the standard applies to all group audits, including those for consolidated and statutory financial statements.  

What has changed in ISA 600?  

The standard now places greater emphasis on a risk-based approach led by the group auditor. It removes the previous “significant/non-significant component” distinction and introduces scalable requirements based on group complexity. The component auditors – often in other jurisdictions- are now formally part of the engagement team, increasing integration and expectations around communication and documentation. 

Consequences of the revision of ISA 600 for your group’s audit 

The revised standard means your group audit will look and feel different from YE 2024 on. Group auditors will be more involved across all components and may ask for additional information earlier in the process. They will also reassess how group materiality is allocated and how component risks are identified and addressed. For Dutch companies, this means the traditional “bottom-up” component-driven audit will change into a group-led strategy. Auditors should justify every decision, from defining what constitutes a component to the level of audit work required. The result: more tailored audit procedures but also more documentation requests. You may also see changes in scoping. Locations or business units previously considered immaterial may now be included based on qualitative risk factors, especially if your financial data is spread across many small entities. 

Consequences of the revision of ISA 600 for international companies 

If your group includes subsidiaries abroad, expect greater coordination requirements. Component auditors are now considered part of the engagement team, so their qualifications, independence and availability must be assessed in more detail by the group auditor. This can lead to increased involvement, especially where local auditors are not from the same network or do not meet quality standards. 

For Dutch-headquartered multinationals, the group auditor may need full access to the overseas auditor’s working papers, or even replicate audit work if language or documentation barriers exist. This could increase the effort (and cost) of your group audit. Additionally, the group auditor is responsible for directing, supervising and reviewing the work of all component auditors. This means you may need to support more interaction between your Dutch audit team and your local finance teams across jurisdictions, especially in the early planning stages. 

Overview of changes for 2025 

• Risk-based audit approach: Led by the group auditor, replacing bottom-up scoping. 
• Broader definition of a component: Any part of the group defined by the group auditor (e.g., branches, business units). 
• Elimination of ‘significant’ vs. ‘non-significant’ components: All components assessed based on risk. 
• Component auditors are now part of the engagement team, with oversight from the group auditor. 
• More robust documentation required in the group audit file. 
• No more desktop reviews or reviews of financial information:  Audit procedures are now always required. 
• Access to component audit files required as part of the group audit documentation. 
• Performance materiality to be allocated by component, based on aggregation risk and audit strategy. 
• Greater flexibility in determining the scope of component audit work (full audit, audit of specific line items, or specified procedures). 

Questions? Address them to your auditor 

The best way to prepare is to engage your auditor early. ISA 600 (revised) introduces more planning requirements, more documentation and more direct involvement from your team. Speak to your auditor about what the changes mean specifically for your group. They can help you identify how best to structure your internal preparation to streamline the process. ISA 600 (revised) is more than a technical update. It reflects a shift in how group audits are conducted, with stronger leadership from the group auditor and higher expectations around documentation and risk analysis. By understanding the new requirements and planning early, you can minimise disruption, control costs and ensure a smooth and effective audit for 2024 and beyond. Feel free to reach out via the contact form or your regular point of contact.