Document ID: chunk:federal_register_of_legislation:F2025C00096:body:0:p29
Version: federal_register_of_legislation:F2025C00096
Segment Type: other
Provision Reference: 
Character Range: 83334–86383

of the commonality of controls across the group and whether, and if so, how, the group centralises activities relevant to financial reporting.

Resources (Ref: Para. 22(b))

 1.          Matters that influence the group auditor's determination of the resources needed to perform the group audit and the nature, timing and extent to which component auditors are to be involved are a matter of professional judgement and may include, for example:

           * The understanding of the group, the components within the group at which audit work is to be performed and whether to perform work centrally, at components or a combination thereof.

           * The knowledge and experience of the engagement team.  For example, component auditors may have greater experience and a more in-depth knowledge than the group auditor of the local industries in which components operate, laws or regulations, business practices, language and culture.  In addition, the involvement of auditor's experts may be needed on complex matters.

           * The initial expectations about the potential risks of material misstatement.

           * The amount or location of resources to allocate to specific audit areas.  For example, the extent to which components are dispersed across multiple locations may impact the need to involve component auditors in specific locations.

           * Access arrangements.  For example, when the group auditor's access to a component in a particular jurisdiction is restricted, component auditors may need to be involved.

           * The nature of the components' activities, including their complexity or specialisation of operations.

           * The group's system of internal control, including the information system in place, and its degree of centralisation.  For example, the involvement of component auditors may be more likely when the system of internal control is decentralised.

           * Previous experience with the component auditor.

 1.          Component auditors may be involved in different phases of an audit, for example, component auditors may design or perform:

           * Risk assessment procedures; and

           * Procedures to respond to the assessed risks of material misstatement.

 1.          The nature, timing and extent to which component auditors are to be involved depends on the facts and circumstances of the group audit engagement.  Often component auditors will be involved in all phases of the audit, but the group auditor may decide to involve component auditors only in a certain phase.  When the group auditor does not intend to involve component auditors in risk assessment procedures, the group auditor may still discuss with component auditors whether there are any significant changes in the business or the system of internal control of the component that could have an effect on the risks of material misstatement of the group financial report.

 2.          ASA 300[52] requires the engagement partner and other key members of the engagement team to be involved in