Document ID: chunk:federal_register_of_legislation:F2025C00096:body:0:p66
Version: federal_register_of_legislation:F2025C00096
Segment Type: other
Provision Reference: 
Character Range: 188666–191877

package issued by group management.

           * Group management's process for ensuring complete, accurate and timely financial reporting by the entities or business units in the group for the consolidation.

           * The process for translating the financial information of foreign entities or business units in the group into the currency of the group financial report.

           * How the group's IT environment is organised for the consolidation and the policies that define the flows of information in the consolidation process, including the IT applications involved.

           * Group management's process for obtaining information on subsequent events.

    Matters Relating to Consolidation Adjustments and Reclassifications:

           * The process for recording consolidation adjustments, including the preparation, authorisation and processing of related journal entries, and the experience of personnel responsible for the consolidation.

           * The consolidation adjustments required by the applicable financial reporting framework.

           * The business rationale for the events and transactions that gave rise to the consolidation adjustments.

           * Frequency, nature and size of transactions between entities or business units in the group.

           * The procedures for monitoring, controlling, reconciling and eliminating intra-group transactions and unrealised profits, and intra-group account balances.

           * Steps taken to arrive at the fair value of acquired assets and liabilities, procedures for amortising goodwill (when applicable), and impairment testing of goodwill, in accordance with the applicable financial reporting framework.

           * Arrangements with a majority owner or minority interests regarding losses incurred by an entity or business unit in the group (e.g., an obligation of the minority interest to make good such losses).

Control Activities

 1.                The group auditor's understanding of the control activities component may include matters such as the following:

           * The commonality of information processing controls and general IT controls for all or part of the group.

           * The extent of the commonality of the design of controls for all or part of the group that address risks of material misstatement of the group financial report at the assertion level.

           * The extent to which commonly designed controls have been implemented consistently for all or part of the group.

Appendix 3

(Ref: Para. A110)

Examples of Events or Conditions that May Give Rise to Risks of Material Misstatement of the Group Financial Report

The following are examples of events (including transactions) and conditions that may indicate the existence of risks of material misstatement of the group financial report, whether due to fraud or error, including with respect to the consolidation process. The examples provided by inherent risk factor cover a broad range of events and conditions; however, not all events and conditions are relevant to every group audit engagement and the list of examples is not exhaustive. The events and conditions have been categorised by the inherent risk