Document ID: chunk:federal_register_of_legislation:F2023C00341:reg:4:p4
Version: federal_register_of_legislation:F2023C00341
Segment Type: reg
Provision Reference: reg 4 (pt 4/42)
Character Range: 18717–21948

Group financial report means a financial report that includes the financial information of more than one component.  The term "group financial report" also refers to combined financial reports aggregating the financial information prepared by components that have no parent but are under common control.

(k)                Group management means management, or those charged with governance, responsible for the preparation of the group financial report.

(l)                 Group‑wide controls means controls designed, implemented and maintained by group management over group financial reporting.

(m)             Significant component means a component identified by the group engagement team (i) that is of individual financial significance to the group, or (ii) that, due to its specific nature or circumstances, is likely to include significant risks of material misstatement of the group financial report.  (Ref: Para. A5‑A6)

10.               Reference to "the applicable financial reporting framework" means the financial reporting framework that applies to the group financial report.  Reference to "the consolidation process" includes:

(a)                The recognition, measurement, presentation, and disclosure of the financial information of the components in the group financial report by way of consolidation, proportionate consolidation, or the equity or cost methods of accounting; and

(b)                The aggregation in combined financial reports of the financial information of components that have no parent but are under common control.

Requirements

Responsibility

11.               The group engagement partner is responsible for the direction, supervision and performance of the group audit engagement in compliance with professional standards and applicable legal and regulatory requirements, and whether the auditor's report that is issued is appropriate in the circumstances.[4]  As a result, the auditor's report on the group financial reports shall not refer to a component auditor, unless required by law or regulation to include such reference.  If such reference is required by law or regulation, the auditor's report shall indicate that the reference does not diminish the group engagement partner's or the group engagement partner's firm's responsibility for the group audit opinion.  (Ref: Para. A8‑A9)

Acceptance and Continuance

12.               In applying ASA 220, the group engagement partner shall determine whether sufficient appropriate audit evidence can reasonably be expected to be obtained in relation to the consolidation process and the financial information of the components on which to base the group audit opinion.  For this purpose, the group engagement team shall obtain an understanding of the group, its components, and their environments that is sufficient to identify components that are likely to be significant components.  Where component auditors will perform work on the financial information of such components, the group engagement partner shall evaluate whether the group engagement team will be able to be involved in the work of those component auditors to the extent necessary to obtain sufficient appropriate audit evidence.  (Ref: Para. A10‑A12)