Document ID: chunk:federal_register_of_legislation:F2025C00096:body:0:p39
Version: federal_register_of_legislation:F2025C00096
Segment Type: other
Provision Reference: 
Character Range: 111823–115032

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 the topics to be discussed, is affected by matters such as initial expectations about the risks of material misstatement and the preliminary expectation of whether to involve component auditors.

 2.          The discussion provides an opportunity to:

           * Share knowledge of the components and their environments, including which components' activities are centralised.

           * Exchange information about the business risks of the components or the group, and how inherent risk factors may affect susceptibility to misstatement of classes of transactions, account balances and disclosures.

           * Exchange ideas about how and where the group financial report may be susceptible to material misstatement due to fraud or error.  ASA 240[72] requires the engagement team discussion to place particular emphasis on how and where the entity's financial report may be susceptible to material misstatement due to fraud, including how fraud may occur.

           * Identify policies followed by group or component management that may be biased or designed to manage earnings that could lead to fraudulent financial reporting.

           * Consider known external and internal factors affecting the group that may create an incentive or pressure for group management, component management, or others to commit fraud, provide the opportunity for fraud to be perpetrated, or indicate a culture or environment that enables group management, component management, or others to rationalise committing fraud.

           * Consider the risk that group or component management may override controls.

           * Discuss fraud that has been identified, or information that indicates existence of a fraud.

           * Identify risks of material misstatement relevant to components where there may be impediments to the exercise of professional scepticism.

           * Consider whether uniform accounting policies are used to prepare the financial information of the components for the group financial report and, if not, how differences in accounting policies are identified and adjusted (when required by the applicable financial reporting framework).

           * Share information about risks of material misstatement of the financial information of a component that may apply more broadly to some, or all, of the other components.

           * Share information that may indicate non-compliance with national laws or regulations, for example, payments of bribes and improper transfer pricing practices.

           * Discuss events or conditions identified by group management, component management or the engagement team, that may cast significant doubt on the group's ability to continue as a going concern.

           * Discuss related party relationships or transactions identified by group management or component management, and any other related parties of which the engagement team is aware.

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