<p><strong>Background: </strong>The environment and the design of auditing regulation can vary significantly between countries, which can affect the form, content and quality of the audit report. The purpose of the International Standards on Auditing, ISA, is to facilitate the work for auditors on an international basis. Sweden today follows the RS 600 which is based on ISA 600, which contains standards for when an auditor use work performed by other auditor. In October 2007, came a revised and redrafted version of ISA 600 that will be enforced in Sweden in the audit of the financial year beginning on 1 January 2011. To what degree the new requirements will affect the group audit is clearly dependent on how the reporting, evaluation and instructions between the group auditor and other auditor has been carried out previously.</p><p><strong>Aim: </strong>The aim with this paper is to explain the reporting between the group auditor and other auditor in an international corporate group. The aim is also to study the factors that can influence the final outcome of this report and why they affect the outcome. Furthermore, the paper will discuss the report process changes that could take place between the group auditor and other auditor after the introduction of ISA 600.</p><p><strong>Definitions: </strong>This paper has a geographic delimitation to Sweden. The paper is delimited to only consider auditing of corporate groups whose parent is located in Sweden and subsidiaries are located abroad. This means that respondents are bounded to the group auditors.</p><p><strong>Completion and results: </strong>Factors affecting reporting between auditors in an international corporate group turned out primarily to be language and communication differences, differences in accounting standards and determination of the materiality level. The risks are considered minimized through documentation reviews and both internal- and external quality controls. An understanding of social and cultural differences is a key factor to be able to have successful cross cultural collaborations. Education, experience and practise are the solutions to understand this issue. This paper demonstrates that cross-cultural training is not given at the accounting firms, which are proposed to be a beneficial investment. The instructions and contact with other auditors are expected to be put earlier after the introduction of ISA 600, also that the report itself will be more detailed.</p>

The AICPA recently released new authoritative audit guidance related to group audits of nonpublic organizations which requires group engagement teams to be involved in the work of a component auditor, including certain minimum baseline requirements and the option for more extensive involvement at the group auditor's discretion. Accordingly, group audits create a scenario where auditors are under the direct oversight of a component audit supervisor, yet their work product is monitored and used by the group engagement team when expressing an opinion on the group financial statements. To my knowledge, prior accounting research has not explored the complexity of auditor decision making in a group audit scenario. Drawing on theory from motivated reasoning, this study investigates how the level of group engagement team involvement in component audit work may influence auditor decision making when a component audit supervisor has expressed preferences for more or less professional skepticism during the component audit process. Prior research in non-group audit settings finds the preferences of audit supervisors can influence the skepticism exhibited by their subordinates. However, in a group audit setting I find that the effects of component supervisor preferences interact with the level of group engagement team involvement in component auditors' work to influence component auditors' budgeted audit hours and planned substantive audit procedures. Results showed that during an accounts receivable audit planning task, auditors who faced an optimistic component supervisor recommended the use of more audit hours and suggested confirming a greater percentage of the accounts receivable balance when a group engagement team chose to be more actively involved in the component audit process than when the group engagement team chose only to review component audit work. However, there were no differences in budgeted audit hours or planned audit procedures when auditors faced a skeptical component supervisor, regardless of the level of group engagement team involvement. Thus, increased involvement of the group engagement team mitigated the influence of an optimistic component supervisor on auditor decision making, but did not significantly influence component auditor judgments when auditors faced a more conservative component supervisor. Path analyses indicated this phenomenon was caused by auditors' sense of pressure to reach appropriate audit conclusions induced by the increased involvement of the group engagement team. These results suggest that the effects of supervisor preferences are complex within a group audit environment, such that the nature of instructions received from a group engagement team may mitigate the effects of supervisor preferences on component auditor decision making. This research has implications for audit practice as it relates to the implementation of the new group audit standard as well as for regulators who establish future auditing guidance. / Ph. D.

Background: The environment and the design of auditing regulation can vary significantly between countries, which can affect the form, content and quality of the audit report. The purpose of the International Standards on Auditing, ISA, is to facilitate the work for auditors on an international basis. Sweden today follows the RS 600 which is based on ISA 600, which contains standards for when an auditor use work performed by other auditor. In October 2007, came a revised and redrafted version of ISA 600 that will be enforced in Sweden in the audit of the financial year beginning on 1 January 2011. To what degree the new requirements will affect the group audit is clearly dependent on how the reporting, evaluation and instructions between the group auditor and other auditor has been carried out previously. Aim: The aim with this paper is to explain the reporting between the group auditor and other auditor in an international corporate group. The aim is also to study the factors that can influence the final outcome of this report and why they affect the outcome. Furthermore, the paper will discuss the report process changes that could take place between the group auditor and other auditor after the introduction of ISA 600. Definitions: This paper has a geographic delimitation to Sweden. The paper is delimited to only consider auditing of corporate groups whose parent is located in Sweden and subsidiaries are located abroad. This means that respondents are bounded to the group auditors. Completion and results: Factors affecting reporting between auditors in an international corporate group turned out primarily to be language and communication differences, differences in accounting standards and determination of the materiality level. The risks are considered minimized through documentation reviews and both internal- and external quality controls. An understanding of social and cultural differences is a key factor to be able to have successful cross cultural collaborations. Education, experience and practise are the solutions to understand this issue. This paper demonstrates that cross-cultural training is not given at the accounting firms, which are proposed to be a beneficial investment. The instructions and contact with other auditors are expected to be put earlier after the introduction of ISA 600, also that the report itself will be more detailed.

The goal of this thesis is to identify the problems of group audits and approach to solving individual problems areas. This thesis describes the contents of group audit manuals, which are not publicly available, and contributes to the understanding of the processes by which a group of auditors shall proceed in their work.