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Microlesson · 5-min read

Key Definitions: Principal Auditor, Other Auditor, Component

# SA 600: Key Definitions

SA 600 "Using the Work of Another Auditor" governs situations where the auditor reporting on an entity's financial statements relies on audit work done by a different auditor for one or more components of that entity.

## The Three Core Definitions

### Principal Auditor (PA)

The auditor responsible for reporting on the financial information of the entity as a whole, even when that information includes components audited by another auditor.

> The PA signs the main audit report and bears ultimate responsibility for it.

### Other Auditor (OA)

An auditor other than the principal auditor who is responsible for reporting on the financial information of a component. The OA's findings feed into the PA's overall conclusions.

### Component

Any division, branch, subsidiary, joint venture, associated enterprise, or other entity whose financial information is included in the financial statements audited by the principal auditor.

## Why This Standard Exists

When a company has branches or subsidiaries audited by different auditors, two problems arise:

1. Role clarity — Who is responsible for what?

2. Coordination — How do the two auditors work together effectively?

SA 600 resolves both by requiring the principal auditor to follow specific procedures when relying on another auditor's work.

Worked example

### Example 1

Domestic Branch Scenario: Paramount Ltd (head office in Mumbai) is audited by CA Meena (Principal Auditor). Its Kolkata branch is audited by CA Ghosh (Other Auditor). The Kolkata branch is the 'Component'. CA Meena must apply SA 600 procedures before relying on CA Ghosh's branch audit report.

### Example 2

Group Subsidiary Scenario: Apex Group Ltd consolidates financials of three wholly owned subsidiaries, each audited by a different CA firm. The group auditor is the Principal Auditor; each subsidiary auditor is an Other Auditor; each subsidiary is a Component.

⚠️ Common exam mistakes

  • Thinking SA 600 applies only to foreign branches — it applies to any component (branch, subsidiary, JV, associated enterprise) audited by a different auditor, domestic or foreign.
  • Assuming the Other Auditor bears no responsibility — the OA is fully responsible for the component report; the PA is responsible for the overall entity report.
  • Restricting 'component' to subsidiaries only — divisions, joint ventures, and associated enterprises are equally components under SA 600.
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