40. My audit clients consist mainly of not-for-profit organizations. I do not use the work of other auditors. Would the new requirements on audits of group financial statements impact me?

Yes, if the organization has “components” as defined in Canadian Auditing Standards (CAS) 600, Special Considerations – Audits of Group Financial Statements (Including the Work of Component Auditors).

The key driver for the use of CAS 600 is whether “components” are of individual financial significance to the group or are likely to include significant risks of material misstatement of the group financial statements. A “component’’ is defined in the CAS as “an entity or business activity for which group or component management prepares financial information that should be included in the group financial statements.” A component can exist if management prepares financial information for various categories or groups of functions, products or services and then aggregates the information in preparing the entity’s financial statements. These financial statements need not be consolidated financial statements. For example, the different operations of a charitable organization may be considered to be components even though they are part of a single legal entity. CAS 600 contains requirements and guidance that apply regardless of whether a component auditor is involved.