Document ID: chunk:federal_register_of_legislation:F2023C00341:reg:4:p17
Version: federal_register_of_legislation:F2023C00341
Segment Type: reg
Provision Reference: reg 4 (pt 17/42)
Character Range: 56378–59325

auditor (including relevant audit documentation sought by the group engagement team) of a component that is accounted for by the equity method of accounting.  If the component is not a significant component, and the group engagement team has a financial report of the component, including the auditor's report thereon, and has access to information kept by group management in relation to that component, the group engagement team may conclude that this information constitutes sufficient appropriate audit evidence in relation to that component.  If the component is a significant component, however, the group engagement team will not be able to comply with the requirements of this Auditing Standard relevant in the circumstances of the group audit.  For example, the group engagement team will not be able to comply with the requirements in paragraphs 30‑31 to be involved in the work of the component auditor.  The group engagement team will not, therefore, be able to obtain sufficient appropriate audit evidence in relation to that component.  The effect of the group engagement team's inability to obtain sufficient appropriate audit evidence is considered in terms of ASA 705.

A16.         The group engagement team will not be able to obtain sufficient appropriate audit evidence if group management restricts the access of the group engagement team or a component auditor to the information of a significant component.

A17.         Although the group engagement team may be able to obtain sufficient appropriate audit evidence if such restriction relates to a component considered not a significant component, the reason for the restriction may affect the group audit opinion.  For example, it may affect the reliability of group management's responses to the group engagement team's enquiries and group management's representations to the group engagement team.

A18.         Law or regulation may prohibit the group engagement partner from declining or withdrawing from an engagement.  For example, in some jurisdictions the auditor is appointed for a specified period of time and is prohibited from withdrawing before the end of that period.  Also, in the public sector, the option of declining or withdrawing from an engagement may not be available to the auditor due to the nature of the mandate or public interest considerations.  In these circumstances, this Auditing Standard still applies to the group audit, and the effect of the group engagement team's inability to obtain sufficient appropriate audit evidence is considered in terms of ASA 705.

A19.         Appendix 1 contains an example of an auditor's report containing a qualified opinion based on the group engagement team's inability to obtain sufficient appropriate audit evidence in relation to a significant component accounted for by the equity method of accounting, but where, in the group engagement team's judgement, the effect is material but not pervasive.