Document ID: chunk:federal_register_of_legislation:F2025C00096:body:0:p44
Version: federal_register_of_legislation:F2025C00096
Segment Type: other
Provision Reference: 
Character Range: 126054–129354

completing the reporting package.

           * Whether the instructions:

                   + Adequately describe the characteristics of the applicable financial reporting framework and the accounting policies to be applied;

                   + Address information necessary to prepare 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;

                   + Address information necessary for making consolidation adjustments, for example, intra-group transactions and unrealised profits, and intra-group account balances; and

                   + Include a reporting timetable.

Considerations When Component Auditors Are Involved (Ref: Para. 31–32)

 1.       During the course of the group audit, the group auditor may communicate the matters in paragraph 31 to other component auditors, if these matters are relevant to the work of those component auditors.  Paragraph A144 includes examples of other matters that may need to be communicated timely in the course of the component auditor's work.

 2.       The nature of related party relationships and transactions may, in some circumstances, give rise to higher risks of material misstatement of the financial report than transactions with unrelated parties.[75] In a group audit there may be a higher risk of material misstatement of the group financial report, including due to fraud, associated with related party relationships when:

           * The group structure is complex;

           * The group's information systems are not integrated and therefore less effective in identifying and recording related party relationships and transactions; and

           * There are numerous or frequent related party transactions between entities and business units.

    Planning and performing the audit with professional scepticism, as required by ASA 200,[76] is therefore particularly important when these circumstances exist.

Identifying and Assessing the Risks of Material Misstatement (Ref: Para. 33)

 1.       The process to identify and assess the risks of material misstatement of the group financial report is iterative and dynamic, and may be challenging, particularly when the component's activities are complex or specialised, or when there are many components across multiple locations.  In applying ASA 315,[77] the auditor develops initial expectations about the potential risks of material misstatement and an initial identification of the significant classes of transactions, account balances and disclosures of the group financial report based on their understanding of the group and its environment, the applicable financial reporting framework and the group's system of internal control.

 2.       The initial expectations about the potential risks of material misstatement take into account the auditor's understanding of the group, including its entities or business units, and the environments and industries in which they operate. Based on the initial expectations, the group auditor may, and often will, involve component auditors in risk assessment procedures as they may have direct knowledge and experience with the entities or business units that