Document ID: chunk:federal_register_of_legislation:F2025C00096:body:0:p38
Version: federal_register_of_legislation:F2025C00096
Segment Type: other
Provision Reference: 
Character Range: 108996–112107

with laws or regulations (Ref: Para. 25, 29)

 1.          In applying ASA 250,[68] the group engagement partner may become aware of information about non-compliance or suspected non-compliance with laws or regulations.  In such circumstances, the group engagement partner may have an obligation under relevant ethical requirements, laws or regulations, to communicate the matter to the component auditor.[69] The obligation of the group engagement partner to communicate non-compliance or suspected non-compliance may extend to auditors of the financial report of entities or business units for which an audit is required by statute, regulation or for another reason, but for which no audit work is performed for purposes of the group audit.

Understanding the Group and Its Environment, the Applicable Financial Reporting Framework and the Group's System of Internal Control (Ref: Para. 30)

 1.          ASA 315[70] contains requirements and guidance regarding the auditor's responsibility to obtain an understanding of the entity and its environment, the applicable financial reporting framework, and the entity's system of internal control.  Appendix 2 of this ASA provides examples of matters related to internal control that may be helpful in obtaining an understanding of the system of internal control in the context of a group environment, and expands on how ASA 315 is to be applied to an audit of a group financial report.

 2.          The understanding of the group and its environment, the applicable financial reporting framework, and the group's system of internal control may be obtained through communications with:

           * Group management, component management or other appropriate individuals within the entity, including individuals within the internal audit function (if the function exists) and individuals who have knowledge of the group's system of internal control, accounting policies and practices, and the consolidation process;

           * Component auditors; or

           * Auditors that perform an audit for statutory, regulatory or other reasons of the financial report of an entity or business unit that is part of the group.

 1.          Obtaining an understanding of the group, identifying risks of material misstatement and assessing inherent risk and control risk may be performed in different ways depending on preferred audit techniques or methodologies and may be expressed in different ways.  Accordingly, when component auditors are involved in the design and performance of risk assessment procedures, the group auditor may need to communicate its preferred approach with component auditors or provide instructions.

Engagement Team Discussion (Ref: Para. 30)

 1.          In applying ASA 315,[71] the group engagement partner and other key engagement team members are required to discuss the application of the applicable financial reporting framework and the susceptibility of the group's financial report to material misstatement.  The group engagement partner's determination of which members of the engagement team to include in the discussion, and