Document ID: chunk:federal_register_of_legislation:F2023C00341:reg:4:p28
Version: federal_register_of_legislation:F2023C00341
Segment Type: reg
Provision Reference: reg 4 (pt 28/42)
Character Range: 88294–91540

require adjustments to amounts reported in the group financial report that do not pass through the usual transaction processing systems, and may not be subject to the same internal controls to which other financial information is subject.  The group engagement team's evaluation of the appropriateness, completeness and accuracy of the adjustments may include:

           * Evaluating whether significant adjustments appropriately reflect the events and transactions underlying them;

           * Determining whether significant adjustments have been correctly calculated, processed and authorised by group management and, where applicable, by component management;

           * Determining whether significant adjustments are properly supported and sufficiently documented; and

           * Checking the reconciliation and elimination of intra‑group transactions and unrealised profits, and intra‑group account balances.

Communication with the Component Auditor (Ref: Para. 40‑41)

A57.         If effective two‑way communication between the group engagement team and the component auditors does not exist, there is a risk that the group engagement team may not obtain sufficient appropriate audit evidence on which to base the group audit opinion.  Clear and timely communication of the group engagement team's requirements forms the basis of effective two‑way communication between the group engagement team and the component auditor(s).

A58.         The group engagement team's requirements are often communicated in a letter of instruction.  Appendix 5 contains guidance on required and additional matters that may be included in such a letter of instruction.  The component auditor's communication with the group engagement team often takes the form of a memorandum or report of work performed.  Communication between the group engagement team and the component auditor, however, may not necessarily be in writing.  For example, the group engagement team may visit the component auditor to discuss identified significant risks or review relevant parts of the component auditor's audit documentation.  Nevertheless, the documentation requirements of this and other Auditing Standards apply.

A59.         In cooperating with the group engagement team, the component auditor(s), for example, would provide the group engagement team with access to relevant audit documentation if not prohibited by law or regulation.

A60.         Where a member of the group engagement team is also a component auditor, the objective for the group engagement team to communicate clearly with the component auditor can often be achieved by means other than specific written communication.  For example:

           * Access by the component auditor to the overall audit strategy and audit plan may be sufficient to communicate the group engagement team's requirements set out in paragraph 40; and

           * A review of the component auditor's audit documentation by the group engagement team may be sufficient to communicate matters relevant to the group engagement team's conclusion set out in paragraph 41.

Evaluating the Sufficiency and Appropriateness of Audit Evidence Obtained

Reviewing the Component Auditor's Audit Documentation (Ref: Para.