Document ID: chunk:federal_register_of_legislation:F2025C00096:body:0:p5
Version: federal_register_of_legislation:F2025C00096
Segment Type: other
Provision Reference: 
Character Range: 12988–16118

units." (Ref: Para. A6)

 2.                    The group auditor determines an appropriate approach to planning and performing audit procedures to respond to the assessed risks of material misstatement of the group financial report. For this purpose, the group auditor uses professional judgement in determining the components at which audit work will be performed. This determination is based on the group auditor's understanding of the group and its environment, and other factors such as the ability to perform audit procedures centrally, the presence of shared service centres, or the existence of common information systems and internal control. (Ref: Para. A7–A9)

Involvement of Component Auditors

 1.                    ASA 220[7] requires the engagement partner to determine that sufficient and appropriate resources to perform the engagement are assigned or made available to the engagement team in a timely manner. In a group audit, such resources may include component auditors. Therefore, this ASA requires the group auditor to determine the nature, timing and extent of involvement of component auditors.

 2.                    The group auditor may involve component auditors to provide information, or to perform audit work, to fulfill the requirements of this ASA. Component auditors may have greater experience with, and a more in-depth knowledge of, the components and their environments (including laws and regulations, business practices, language, and culture) than the group auditor. Accordingly, component auditors can be, and often are, involved in all phases of the group audit. (Ref: Para. A10–A11)

 3.                    Audit risk is a function of the risks of material misstatement and detection risk.[8] Detection risk in a group audit includes the risk that a component auditor may not detect a misstatement in the financial information of a component that could cause a material misstatement of the group financial report, and that the group auditor may not detect this misstatement. Accordingly, this ASA requires sufficient and appropriate involvement by the group engagement partner or group auditor, as applicable, in the work of component auditors and emphasises the importance of two-way communication between the group auditor and component auditors. In addition, this ASA explains the matters that the group auditor takes into account when determining the nature, timing and extent of the direction and supervision of component auditors and the review of their work. (Ref: Para. A12–A13)

Professional Scepticism

 1.                    In accordance with ASA 200,[9] the engagement team is required to plan and perform the group audit with professional scepticism and to exercise professional judgement. The appropriate exercise of professional scepticism may be demonstrated through the actions and communications of the engagement team, including emphasising the importance of each engagement team member exercising professional scepticism throughout the group audit. Such actions and communications may include specific steps to mitigate impediments that may impair the appropriate