Document ID: chunk:federal_register_of_legislation:F2025C00096:body:0:p26
Version: federal_register_of_legislation:F2025C00096
Segment Type: other
Provision Reference: 
Character Range: 74896–77973

the equity method and the group auditor's access to information or people at the entity is restricted, the group auditor may be able to obtain information to be used as audit evidence regarding the entity's financial information, for example:

           * Financial information that is available from group management, as group management also needs to obtain the non-controlled entity's financial information in order to prepare the group financial report.

           * Publicly available information, such as an audited financial report, public disclosure documents, or quoted prices of equity instruments in the non-controlled entity.

    It is a matter of professional judgement, particularly in view of the assessed risks of material misstatement of the group financial report and considering other sources of information that may corroborate or otherwise contribute to audit evidence obtained, whether the auditor can obtain sufficient appropriate audit evidence.[47]

 1.          If the group has a non-controlling interest in an entity that is accounted for by the equity method and access to information or people at the entity is restricted, the group auditor may consider whether such restrictions are inconsistent with group management's assertions regarding the appropriateness of the use of the equity method of accounting.

 2.          When the group auditor is unable to obtain sufficient appropriate audit evidence due to restrictions on access to information or people, the group auditor may:

           * Communicate the restrictions to the group auditor's firm to assist the group auditor in determining an appropriate course of action.  For example, the group auditor's firm may communicate with group management about the restrictions and encourage group management to communicate with regulators.  This may be useful when restrictions affect multiple audits in the jurisdiction or by the same firm, for example, because of war, civil unrest or outbreaks of disease in a major economy.

           * Be required by law or regulation to communicate with regulators, listing authorities, or others, about the restrictions.

 1.          Restrictions on access may have other implications for the group audit.  For example, if restrictions are imposed by group management, the group auditor may need to reconsider the reliability of group management's responses to the group auditor's enquiries and whether the restrictions call into question group management's integrity.

Effect of Restrictions on Access to Information or People on the Auditor's Report on a Group Financial Report (Ref: Para. 20–21)

 1.          ASA 705[48] contains requirements and guidance about how to address situations when the group auditor is unable to obtain sufficient appropriate audit evidence.  Appendix 1 contains an example of an auditor's report containing a qualified group audit opinion based on the group auditor's inability to obtain sufficient appropriate audit evidence in relation to a component that is accounted for by the equity method.

Law or Regulation