Document ID: chunk:federal_register_of_legislation:F2025C00096:body:0:p28
Version: federal_register_of_legislation:F2025C00096
Segment Type: other
Provision Reference: 
Character Range: 80363–83612

or the predecessor auditor.  In a recurring group audit engagement, the group auditor's preliminary understanding may be obtained through prior period audits.  This preliminary understanding may assist the group auditor in developing initial expectations about the classes of transactions, account balances and disclosures that may be significant.

 2.          The group auditor may also use information obtained during the engagement acceptance and continuance process in establishing the overall group audit strategy and group audit plan, for example, in relation to the resources needed to perform the group audit.

 3.          The process of establishing the overall group audit strategy and group audit plan and initial expectations about the classes of transactions, account balances and disclosures that may be significant at the group financial statement level may assist the group auditor in developing a preliminary determination of matters such as:

           * Whether to perform audit work centrally, at components or a combination thereof; and

           * The nature, timing and extent of audit work to be performed with respect to the financial information of components (e.g., design and perform risk assessment procedures, further audit procedures, or a combination thereof).

Components at Which to Perform Audit Work (Ref: Para. 22(a))

 1.          The determination of components at which to perform audit work is a matter of professional judgement.  Matters that may influence the group auditor's determination include, for example:

           * The nature of events or conditions that may give rise to risks of material misstatement at the assertion level of the group financial report that are associated with a component, for example:

                   + Newly formed or acquired entities or business units.

                   + Entities or business units in which significant changes have taken place.

                   + Significant transactions with related parties.

                   + Significant transactions outside the normal course of business.

                   + Abnormal fluctuations identified by analytical procedures performed at the group level, in accordance with ASA 315.[51]

           * The disaggregation of significant classes of transactions, account balances and disclosures in the group financial report across components, considering the size and nature of assets, liabilities and transactions at the location or business unit relative to the group financial report.

           * Whether sufficient appropriate audit evidence is expected to be obtained for all significant classes of transactions, account balances and disclosures in the group financial report from audit work planned on the financial information of identified components.

           * The nature and extent of misstatements or control deficiencies identified at a component in prior period audits.

           * The nature and extent of the commonality of controls across the group and whether, and if so, how, the group centralises activities relevant to financial reporting.

Resources (Ref: Para. 22(b))

 1.          Matters that influence the group auditor's determination of the resources needed to perform