Document ID: chunk:federal_register_of_legislation:F2025C00096:body:0:p21
Version: federal_register_of_legislation:F2025C00096
Segment Type: other
Provision Reference: 
Character Range: 60445–63601

work assigned.  In these circumstances, the engagement team may need to take additional time to appropriately question management's assertions, make appropriate judgements, or appropriately review the audit work performed.

 1.          The exercise of professional scepticism by the group auditor includes remaining alert for inconsistent information from component auditors, component management and group management about matters that may be significant to the group financial report.

Definitions

Aggregation Risk (Ref: Para. 14(a))

 1.          Aggregation risk exists in all audits of the financial report, but is particularly important to understand and address in a group audit because there is a greater likelihood that audit procedures will be performed on classes of transactions, account balances or disclosures that are disaggregated across components.  Generally, aggregation risk increases as the number of components increases at which audit procedures are performed separately, whether by component auditors or other members of the engagement team.

Component (Ref: Para. 14(b))

 1.          The group auditor uses professional judgement in determining components at which audit work will be performed.  Paragraph A7 explains that the financial information of certain entities or business units may be considered together for purposes of planning and performing audit procedures.  However, the group auditor's responsibility for the identification and assessment of the risks of material misstatement of the group financial report encompasses all of the entities and business units whose financial information is included in the group financial report.

Component Auditor (Ref: Para. 14(c))

 1.          References in this ASA to the engagement team include the group auditor and component auditors.  Component auditors may be from a network firm, a firm that is not a network firm, or the group auditor's firm (e.g., another office within the group auditor's firm).

 2.          In some circumstances, the group auditor may perform centralised testing on classes of transactions, account balances or disclosures, or may perform audit procedures related to a component.  In these circumstances, the group auditor is not considered a component auditor.

 3.          Paragraph 24 requires the group auditor to request the component auditor to confirm that the component auditor will cooperate with the group auditor, including whether the component auditor will perform the work requested by the group auditor.  Paragraph A58 provides guidance for circumstances in which the component auditor is unable to provide such a confirmation.

Component Management (Ref: Para. 14(d))

 1.          Component management refers to management responsible for the financial information or other activity (e.g., processing of transactions at a shared service centre) at an entity or business unit that is part of the group.  When the group auditor considers the financial information of certain entities or business units together as a component or determines that a shared service centre is a component (see paragraphs A7‒A8), component management