# SA 299 — Joint Audit of Financial Statements

## Concept

When two or more auditors are appointed to audit the same set of FS, it is a joint audit. Each is a Joint Auditor.

## Advantages vs Disadvantages

Advantages	Disadvantages
Sharing of expertise	Fees being shared
Mutual consultation	Psychological problems where firms of different standing are paired
Lower workload per firm	Superiority complex of some auditors
Better quality of performance	Co-ordination problems
Improved service to client	Areas of common concern may be neglected
Lower staff development costs	Uncertainty about liability for work done
Lower costs to carry out work
Healthy competition for better performance

## Audit Planning & Strategy — JOINTLY

The audit plan and strategy shall be established by the joint auditors jointly.

### Before commencement, joint auditors should jointly:

Consider results of preliminary engagement activities and knowledge from other engagements.
Identify division of audit areas AND common audit areas.
Communicate factors significant in directing the engagement team's efforts.
Ascertain the reporting objective of the engagement.
Ascertain the NTE of resources necessary.

### Each joint auditor should:

Assess ROMM and communicate to the other joint auditors.
Discuss & document NTE of audit procedures for common AND specifically allotted areas.
Obtain a common engagement letter and a common Management Representation Letter.
Sign the work allocation document — communicate it to TCWG.

## Responsibility: Who is liable for what?

### Individual (Several) Responsibility

Each joint auditor is responsible only for the work allocated to them.

### Joint AND Several Responsibility — for the following:

1. Audit work that is NOT divided among joint auditors and is carried out by all of them.

2. Decisions taken by all joint auditors under audit planning for common audit areas.

3. Matters brought to the notice of joint auditors by any one of them, where there is agreement among them.

4. Examining that the FS comply with the requirements of relevant statutes.

5. Presentation and disclosure of FS as required by the AFRF.

6. Ensuring the audit report complies with relevant statutes.

## Inter-auditor Communication

If a joint auditor comes across matters relevant to other joint auditors, that joint auditor shall communicate in writing to all other joint auditors prior to completion of the audit.

## Reporting

Joint auditors are required to issue a COMMON audit report.
BUT, where there is disagreement on opinion or any matter to be covered in the report, they shall express their opinions in separate audit reports.
In that case, each joint auditor's report shall make reference to the other's report under an Other Matter (OM) paragraph (SA 706).

Worked example

### Example 1

Example 1 — Allocation responsibility: A & Co. and B & Co. are joint auditors. A & Co. is allocated 'Inventory and Fixed Assets' while B & Co. is allocated 'Revenue and Receivables'. If a misstatement is later discovered in Inventory, A & Co. is solely responsible. B & Co. is NOT liable for the work in Inventory.

### Example 2

Example 2 — Joint and several liability for compliance with statute: Whether or not work is divided, all joint auditors are JOINTLY AND SEVERALLY responsible for ensuring the FS comply with the Companies Act, 2013 and that disclosures meet the AFRF.

### Example 3

Example 3 — Communication of significant matters: Joint Auditor A discovers during inventory audit that the company has not provided for slow-moving stock — which affects gross profit ratio relevant to Joint Auditor B's revenue work. A must communicate this in writing to B (and other joint auditors) BEFORE completion of the audit.

### Example 4

Example 4 — Disagreement on opinion: Joint Auditors A & Co. and B & Co. disagree on whether to qualify the opinion regarding a contingent liability. A wants a clean opinion; B wants a qualified opinion. They cannot issue a common report. Each issues a SEPARATE report, and each refers to the other's report under an Other Matter paragraph (SA 706).

⚠️ Common exam mistakes

Believing all joint auditors are always liable for all work — NO, each is solely liable for their allocated work.
Believing each joint auditor is solely liable for everything — NO, compliance with statutes, presentation/disclosure, and audit-report compliance are JOINT AND SEVERAL.
Issuing a joint report when there is genuine disagreement — wrong; separate reports are required, cross-referenced via OM paragraph (SA 706).
Forgetting that planning and strategy must be JOINTLY established by all joint auditors.
Obtaining separate engagement letters and management reps — there should be a COMMON engagement letter and COMMON management representation letter.
Forgetting to communicate the work allocation document to TCWG (it must be signed by all joint auditors and communicated to TCWG).
Communicating matters relevant to other joint auditors orally — SA 299 requires WRITTEN communication, before completion of the audit.

Reference: — SA 299 (Revised) - Joint Audit of Financial Statements (ICAI)

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SA 299 - Joint Audit of Financial Statements

Worked example

⚠️ Common exam mistakes