Document ID: chunk:federal_register_of_legislation:F2023C00341:reg:4:p22
Version: federal_register_of_legislation:F2023C00341
Segment Type: reg
Provision Reference: reg 4 (pt 22/42)
Character Range: 71099–74171

interact and are not mutually exclusive.  For example, the extent of the group engagement team's procedures to obtain an understanding of Component Auditor A, who consistently applies common quality control and monitoring policies and procedures and a common audit methodology or operates in the same jurisdiction as the group engagement partner, may be less than the extent of the group engagement team's procedures to obtain an understanding of Component Auditor B, who is not consistently applying common quality control and monitoring policies and procedures and a common audit methodology or operates in a foreign jurisdiction.  The nature of the procedures performed in relation to Component Auditors A and B may also be different.

A35.         The group engagement team may obtain an understanding of the component auditor in a number of ways.  In the first year of involving a component auditor, the group engagement team may, for example:

           * Evaluate the results of the quality control monitoring system where the group engagement team and component auditor are from a firm or network that operates under and complies with common monitoring policies and procedures;[20]

           * Visit the component auditor to discuss the matters in paragraph 19(a)‑(c);

           * Request the component auditor to confirm the matters referred to in paragraph 19(a)‑(c) in writing.  Appendix 4 contains an example of written confirmations by a component auditor;

           * Request the component auditor to complete questionnaires about the matters in paragraph 19(a)‑(c);

           * Discuss the component auditor with colleagues in the group engagement partner's firm, or with a reputable third party that has knowledge of the component auditor; or

           * Obtain, where possible under applicable law or regulation, confirmations of credentials, such as confirmation of membership of a professional body, from the professional body or bodies to which the component auditor belongs, the authorities by which the component auditor is licensed, or other third parties.

    In subsequent years, the understanding of the component auditor may be based on the group engagement team's previous experience with the component auditor.  The group engagement team may request the component auditor to confirm whether anything in relation to the matters listed in paragraph 19(a)‑(c) has changed since the previous year.

A36.         Where independent oversight bodies have been established to oversee the auditing profession and monitor the quality of audits, awareness of the regulatory environment may assist the group engagement team in evaluating the independence and competence of the component auditor.  Information about the regulatory environment may be obtained from the component auditor or information provided by the independent oversight bodies.

Ethical Requirements that Are Relevant to the Group Audit (Ref: Para. 19(a))

A37.         When performing work on the financial information of a component for a group audit, the component auditor