Document ID: chunk:federal_register_of_legislation:F2025C00096:body:0:p18
Version: federal_register_of_legislation:F2025C00096
Segment Type: other
Provision Reference: 
Character Range: 52111–55167

of a group may also prepare its own group financial report that incorporates the financial information of those entities or business units it encompasses (that is, a sub-group).  This ASA applies to an audit of the group financial report of such sub-groups performed for statutory, regulatory or other reasons.

 4.              A single legal entity may be organised with more than one business unit, for example, a company with operations in multiple locations, such as a bank with multiple branches.  When those business units have characteristics such as separate locations, separate management, or separate information systems (including a separate general ledger) and the financial information is aggregated in preparing the single legal entity's financial report, such a financial report meets the definition of a group financial report because they include the financial information of more than one entity or business unit through a consolidation process.

 5.              In some cases, a single legal entity may configure its information system to capture financial information for more than one product or service line for legal or regulatory reporting or other management purposes.  In these circumstances, the entity's financial report is not a group financial report because there is no aggregation of the financial information of more than one entity or business unit through a consolidation process.  Further, capturing separate information (e.g., in a sub-ledger) for legal or regulatory reporting or other management purposes does not create separate entities or business units (e.g., divisions) for purposes of this ASA.

Groups and Components (Ref: Para. 4–5)

 1.              The group's information system, including its financial reporting process, may or may not be aligned with the group's organisational structure.  For example, a group may be organised according to its legal structure, but its information system may be organised by function, process, product or service (or by groups of products or services), or geographic locations for management or reporting purposes.

 2.              Based on the understanding of the group's organisational structure and information system, the group auditor may determine that the financial information of certain entities or business units may be considered together for purposes of planning and performing audit procedures.  For example, a group may have three legal entities with similar business characteristics, operating in the same geographical location, under the same management, and using a common system of internal control, including the information system.  In these circumstances, the group auditor may decide to treat these three legal entities as one component.

 3.              A group may also centralise activities or processes that are applicable to more than one entity or business unit within the group, for example through the use of a shared service centre.  When such centralised activities are relevant to the group's financial reporting process, the group