Document ID: chunk:federal_register_of_legislation:F2023C00341:reg:4:p7
Version: federal_register_of_legislation:F2023C00341
Segment Type: reg
Provision Reference: reg 4 (pt 7/42)
Character Range: 27492–30603

level.  (Ref: Para. A46)

23.               If a component is subject to audit by statute, regulation or other reason, and the group engagement team decides to use that audit to provide audit evidence for the group audit, the group engagement team shall determine whether:

(a)                materiality for the component financial report as a whole; and

(b)                performance materiality at the component level

meet the requirements of this Auditing Standard.

Responding to Assessed Risks

24.               The auditor is required to design and implement appropriate responses to address the assessed risks of material misstatement of the financial report.[10]  The group engagement team shall determine the type of work to be performed by the group engagement team, or the component auditors on its behalf, on the financial information of the components, see paragraphs 26‑29 of this Auditing Standard.  The group engagement team shall also determine the nature, timing and extent of its involvement in the work of the component auditors, see paragraphs 30‑31 of this Auditing Standard.

25.               If the nature, timing and extent of the work to be performed on the consolidation process or the financial information of the components are based on an expectation that group‑wide controls are operating effectively, or if substantive procedures alone cannot provide sufficient appropriate audit evidence at the assertion level, the group engagement team shall test, or request a component auditor to test, the operating effectiveness of those controls.

Determining the Type of Work to Be Performed on the Financial Information of Components (Ref: Para. A47)

Significant Components

26.               For a component that is significant due to its individual financial significance to the group, the group engagement team, or a component auditor on its behalf, shall perform an audit of the financial information of the component using component materiality.

27.               For a component that is significant because it is likely to include significant risks of material misstatement of the group financial report due to its specific nature or circumstances, the group engagement team, or a component auditor on its behalf, shall perform one or more of the following:

(a)                An audit of the financial information of the component using component materiality.

(b)                An audit of one or more account balances, classes of transactions or disclosures relating to the likely significant risks of material misstatement of the group financial report.  (Ref: Para. A48)

(c)                Specified audit procedures relating to the likely significant risks of material misstatement of the group financial report.  (Ref: Para. A49)

Components that Are Not Significant Components

28.               For components that are not significant components, the group engagement team shall perform analytical procedures at group level.  (Ref: Para. A50)

29.               If the group engagement team does not consider that sufficient appropriate audit evidence on which