Black, Grey, and the Global Audit Reality

In audit, some things appear straightforward: black is black. Yet in practice, especially in cross-border group audits, grey can take on many shades. What looks sufficient in one jurisdiction may feel inadequate in another. The accounting entry may be the same, but its interpretation, documentation, and oversight vary depending on the standards and professional culture applied.

This is why group audits are among the most complex assignments an assurance professional can undertake. They are not simply about reconciling numbers from different components. They are about reconciling different regulatory expectations, levels of auditor judgment, and quality of evidence into one coherent assurance opinion.

Why Group Audits Are Uniquely Challenging

The Canadian Public Accountability Board’s (CPAB) 2025 guidance on CAS 600, Audits of Group Financial Statements, offers detailed advice on this subject. It highlights recurring inspection findings that are familiar to many practitioners: over-reliance on group-wide controls, inconsistent oversight of component auditors, thin documentation, and inadequate attention to consolidation processes.

Each of these is a technical issue, but together they illustrate the central challenge: with multiple auditors across jurisdictions, divergence is inevitable unless someone provides a steady anchor.

• Different standards, same transaction. A lease may be presented under IFRS in one subsidiary, under US GAAP in another, and local GAAP elsewhere. The economics are the same, but the recognition and measurement differ.
• Different regulatory cultures. The PCAOB’s rules-heavy approach contrasts with the FRC’s principles-based oversight. Both expect rigor, but their emphasis differs.
• Different component capabilities. A component audit team in a highly regulated market may deliver meticulous evidence, while a team in another jurisdiction may operate with lighter documentation norms.

These differences create the “many shades of grey” that group auditors must resolve.

The Real Challenge: Culture, Not Checklists

Technical programs matter, but they do not address the real obstacle. The true challenge in group audits is culture.

• A culture of skepticism. Component auditors must be challenged, not just coordinated. A conclusion accepted without question may conceal risk.
• A culture of documentation. Work performed but not recorded is invisible. Regulators and reviewers cannot rely on intent; they need evidence.
• A culture of accountability. The group engagement partner cannot stand back as a coordinator of files. They are the owner of the opinion, responsible for integrating all pieces into one assurance message.

This cultural dimension determines whether the audit is a patchwork of local efforts or a cohesive global exercise.

Many Auditors, One Leading Voice

A group audit often resembles a choir of voices spread across geographies, industries, and time zones. Each sings to their own sheet of music. Without a conductor, harmony falters.

That is why one leading voice is essential. The group engagement partner must:

• Set the tone. Define the expectations of skepticism and quality across all components.
• Drive alignment. Ensure component auditors understand not only what procedures to perform, but why they matter in the group context.
• Integrate the narrative. A group audit opinion is not a collection of local reports—it is one unified assurance message to regulators, investors, and boards.
• Own responsibility. When issues arise, “the component auditor missed it” will never be an acceptable explanation. The group auditor is accountable for the whole.

From Grey to Clarity

The CPAB guide goes beyond simply restating CAS 600. It anchors its messages in inspection-based findings, showing exactly where real audits have gone wrong and what procedures could have prevented those failures. It is practical in its focus, offering detailed guidance on the oversight of component auditors, testing of consolidation processes, and addressing aggregation risk.

Its strength lies in how it combines regulatory expectations with concrete illustrations, turning principles into actions that auditors can embed into their methodology and training. While no guide can replace the leadership and culture that define audit quality, this one equips assurance leaders with sharper tools to manage complexity, resolve shades of grey, and bring coherence to cross-border group audits.

KNAV Comments

Group audits are complex as they are defining tests of audit quality in an interconnected world. CPAB’s guidance provides the technical backbone. But what will distinguish success is whether firms embrace the cultural imperative: skepticism that digs deeper, documentation that speaks clearly, and leadership that takes ownership.

In the end, many auditors may contribute to a group audit, but credibility depends on one voice — steady, skeptical, and accountable — delivering assurance across borders.