Group Audits in the FRC Audit Inspections 2022

September 16, 2022
September 1, 2022

Group audits

Group audits are a hot topic in audit right now, with standard changes on the horizon. It’s no surprise given the inherent complexities of auditing groups that the UK regulator focused on this area in their 2022 inspections. The inspections highlighted several good practices, with 3 of the 7 firms only receiving positive comments on their group audits. However, findings were identified for 2 firms – identifying areas for improvement.Smaller firms can learn a lot from these inspection comments to improve the quality of their group audit engagements. They span the full lifecycle of a group audit, showing opportunities for improvement at all phases.


Office workers in a meeting room talking, Group Audits

A consistent theme across the inspection comments was the interaction between the group engagement team and component audit team. This starts at the planning phase, through integrating the component audit team in planning and risk assessment activities. Group instructions are also key. Group engagement teams should ensure instructions are comprehensive to give clear direction to component auditors. Ensure you establish strong two-way communication between the group and component engagement teams from the very start of the audit process.

Responding to risk

A fundamental complexity of group audits is quite simply project management and coordination. This isn’t simply obtaining the required information from clients. It extends to the broader collation of misstatements, findings, and other matters the group engagement team needs to raise with management and those charged with governance.

The good news is that advances in technology are making this far less onerous on group engagement teams. Gone are the days of trying to unpick email inboxes. Client collaboration solutions provide a holistic oversight across the whole group client. And data-driven audit documentation tools such as Inflo now allow group auditors to instantly aggregate all the matters which may need to be discussed with stakeholders at the client. Smaller firms wrestling with desktop solutions are at a huge disadvantage on group audits versus firms who are leveraging the latest technologies.

It is important that evidence is captured on the audit file regarding interactions with component auditors and the review of their audit procedures. This is most critical in complex and judgmental audit areas, such as revenue testing, management estimates, and consolidation procedures. Group engagement teams should also ensure they conclude on the approach performed and the need for any additional audit procedures.

Critically evaluate whether you have the right technologies in place in your firm to support high-quality and efficient audits. If you don’t, now is the time to invest before group audit procedures advance further.


As part of the interaction with component auditors, it is important to document the challenges they raise and the resolutions to those challenges. Being clear who made key decisions impacting the component audit is a key part of this documentation.

Communication to the audit committee regarding the oversight of the audit and judgements around the audit approach should be sufficiently detailed to evidence rationale.

Finalize the group audit strongly with robust documentation and communications.

Next steps

The FRC’s latest inspection results include many nuggets of wisdom for group auditors. If your firm audits any groups there are likely to be opportunities to improve the quality, and the effectiveness, of your group audit approach. To absorb all the takeaways to support advancements in your firm’s group auditing, or your next group audit, download our full inspection results guide. The guide includes quick reference cheat-sheets, listing 11 group auditing tips. Included below is a sample of 3 of these tips.

Cheat sheet preview



  • Actively integrate the component audit team in the audit process, including in planning and risk assessment.

Responding to risk

  • Use tracking documents to monitor and record work performed and use this to raise matters with management and the Audit Committee.


  • Ensure there is clarity on who made the key judgements and decisions on the component audit.
FRC Audit Report 2021-22, Group Audits
Find out today what we can do for you!