A joint audit is the audit of an entity by more than one auditing firm in order to present a single audit opinion to the audit committee, investors, government or a third party. As a result, all of the auditors on the audited client share the responsibility for the client.
The following are 5 situations where joint audit would be more appropriate.
- In the case of foreign subsidiaries, the financial statements of subsidiaries may be prepared using the local laws and accounting standards which may be different from those applicable to the holding company and at the same time, the local laws may require that the group employ local auditors to audit the accounts of the subsidiary to satisfy local law requirements. In such cases appointing joint auditors can be the only option available,
- If the entity is of the opinion that having two auditors to issue an opinion on the entity’s financial statements gives more assurance than one auditor providing assurance on the financial statements, it may appoint joint auditors.
- In the case of groups with components widely dispersed, the joint audits would improve the geographical coverage of the auditors and enhance the effectiveness of the opinion.
- If considering the volumes of its business the entity thinks that a single firm shall not be in a position to effectively complete the assignment, it may appoint joint auditors.
- In case of organizations having a number of branches and where the reports are to be submitted in a very short time span, like in case of banking companies’ joint audits are the only solution for timely and proper completion of the audits.