In a group audit one auditor signs the opinion on the consolidated accounts while others often audit the subsidiaries. German law makes the group auditor review and document the other auditors' work, and US rules require another auditor's report to be filed where the principal auditor relies on it. Reliefs for subsidiaries in the UK and Germany depend on the parent's consolidated accounts being audited.
The group auditor's responsibility
Under German law the group auditor must also audit the accounts combined in the consolidated accounts, in particular the consolidation adjustments, and where another auditor audited a subsidiary the group auditor must review and document that work. The group auditor is elected by the parent's shareholders, and German parents prepare consolidated accounts within five months of year end.
For SEC filers, where the principal auditor relies on another independent accountant's examination of part of the company and says so, the other accountant's separate report must also be filed.1234
When subsidiaries rely on the parent's audit
Some local reliefs depend on the parent's audit. A German subsidiary can skip its own audit only if its EU or EEA parent's consolidated accounts are audited under the EU directives and the parent gives a guarantee. A UK intermediate parent can avoid group accounts only if the non-UK parent's consolidated accounts are audited by an authorised person and filed at Companies House.56
| Market | Rule | Effect for component audits | Source |
|---|---|---|---|
| Germany | Group auditor reviews other auditors' work | Component work must be reviewed and documented | § 317(3) HGB |
| Germany | Subsidiary exemption with EU/EEA parent | Parent's group accounts must be audited under EU directives | § 264(3) HGB |
| United Kingdom | Intermediate parent exemption | Non-UK group accounts must be audited by an authorised person | CA 2006 s401 |
| United States (SEC) | Reliance on other auditors | Other auditor's report must be filed | Regulation S-X Rule 2-05 |
Decisions to make
- Will one network audit every component, or will local firms be used?14Using other auditors triggers review and documentation duties for the group auditor and, for SEC filers, filing of their reports.
- Do any subsidiaries rely on the parent's audited accounts for an exemption?56The exemption fails if the parent's accounts are not audited and filed as required.
- Does the group reporting timetable fit the German five-month consolidation deadline?3The group audit has to fit within the consolidation deadline for German parents.
Documents usually needed
- Group audit instructions to component auditors
- Component auditor reports and clearance memoranda
- Group auditor's review documentation
- Parent's audited consolidated accounts for exemption filings
- Group reporting timetable
Common mistakes
- Assuming component auditors' reports can be accepted without review
- Relying on an exemption when the parent's group audit is not yet signed by the filing date
- Setting a group timetable longer than the German consolidation deadline
- Not filing the other auditor's report in an SEC filing where reliance is stated
What this guide does not yet confirm
These points need checking with a qualified local professional before you rely on them.
- ISA 600 (Revised) on group audits and the PCAOB's amended standards on lead auditor responsibilities could not yet be checked (IAASB and PCAOB sites not accessible), so their effective dates are not stated.
- EU Audit Directive Article 27 on group audits and third-country component auditors could not yet be checked.
- Group audit rules in India, Singapore, the UAE and Saudi Arabia were not researched.
Sources and review status
Each statement is numbered to the source it was checked against. We use official sources where we can, and each statement says whether it was checked against an official or a secondary source. Sources last checked on 19 October 2026. None of it has been professionally reviewed yet: it is research checked against official and secondary sources by WONE Global, not legal or tax advice.
The German group auditor must also audit the annual financial statements combined in the consolidated accounts, in particular the consolidation adjustments, and where another auditor has audited them the group auditor must review that auditor's work and document the review. Group audits under the HGB.
The auditor of German consolidated accounts is elected by the shareholders of the parent company. Group audits under the HGB.
A German parent corporation that can exercise controlling influence over another undertaking must prepare consolidated accounts and a group management report within the first five months of the group financial year. Four months for capital-market-oriented parents; size exemptions in § 293 HGB.
Where the principal auditor of an SEC filer relies on another independent accountant's examination of part of the company and says so in its report, the other accountant's separate report must be filed. Federal, Regulation S-X.
Regulatory text read on the Cornell Legal Information Institute reproduction of the Code of Federal Regulations; the eCFR at ecfr.gov is the government publication.
A German subsidiary can be exempted from auditing its own accounts only where its parent, based in the EU or EEA, prepares consolidated accounts that are audited in line with Directives 2013/34/EU and 2006/43/EC, guarantees the subsidiary's obligations, and all shareholders consent. Non-capital-market-oriented corporations; the documents must be published in Germany.
A UK intermediate parent relying on a non-UK parent's consolidated accounts to avoid preparing group accounts needs those accounts to be audited by a person authorised under the law of the parent's jurisdiction, and filed at Companies House with the auditor's report. Section 401 conditions; not available to traded companies.
Questions on this topic
6 statements on group audits and component auditors
