Document ID: chunk:federal_register_of_legislation:F2023C00341:reg:4:p19
Version: federal_register_of_legislation:F2023C00341
Segment Type: reg
Provision Reference: reg 4 (pt 19/42)
Character Range: 62046–65495

framework; the nature of the entity; objectives and strategies and related business risks; and measurement and review of the entity's financial performance.[17]  Appendix 2 of this Auditing Standard contains guidance on matters specific to a group, including the consolidation process.

Instructions Issued by Group Management to Components (Ref: Para. 17)

A24.         To achieve uniformity and comparability of financial information, group management ordinarily issues instructions to components.  Such instructions specify the requirements for financial information of the components to be included in the group financial report and often include financial reporting procedures manuals and a reporting package.  A reporting package ordinarily consists of standard formats for providing financial information for incorporation in the group financial report.  Reporting packages generally do not, however, take the form of a financial report prepared and presented in accordance with the applicable financial reporting framework.

A25.         The instructions ordinarily cover:

           * The accounting policies to be applied;

           * Statutory and other disclosure requirements applicable to the group financial report, including:

                   + The identification and reporting of segments;

                   + Related party relationships and transactions;

                   + Intra‑group transactions and unrealised profits;

                   + Intra‑group account balances; and

           * A reporting timetable.

A26.         The group engagement team's understanding of the instructions may include the following:

           * The clarity and practicality of the instructions for completing the reporting package.

           * Whether the instructions:

                   + Adequately describe the characteristics of the applicable financial reporting framework;

                   + Provide for disclosures that are sufficient to comply with the requirements of the applicable financial reporting framework, for example disclosure of related party relationships and transactions, and segment information;

                   + Provide for the identification of consolidation adjustments, for example intra‑group transactions and unrealised profits, and intra‑group account balances; and

                   + Provide for the approval of the financial information by component management.

Fraud (Ref: Para. 17)

A27.         The auditor is required to identify and assess the risks of material misstatement of the financial report due to fraud, and to design and implement appropriate responses to the assessed risks.[18]  Information used to identify the risks of material misstatement of the group financial report due to fraud may include the following:

           * Group management's assessment of the risks that the group financial report may be materially misstated as a result of fraud.

           * Group management's process for identifying and responding to the risks of fraud in the group, including any specific fraud risks identified by group management, or account balances, classes of transactions, or disclosures for which a risk of fraud is likely.

           * Whether there are particular components for which a risk of fraud is likely.

           * How those charged with governance of the group monitor group management's processes for identifying and responding to the risks of fraud