Document ID: chunk:federal_register_of_legislation:F2023C00341:reg:4:p5
Version: federal_register_of_legislation:F2023C00341
Segment Type: reg
Provision Reference: reg 4 (pt 5/42)
Character Range: 21688–24878

of such components, the group engagement partner shall evaluate whether the group engagement team will be able to be involved in the work of those component auditors to the extent necessary to obtain sufficient appropriate audit evidence.  (Ref: Para. A10‑A12)

13.               If the group engagement partner concludes that:

(a)                it will not be possible for the group engagement team to obtain sufficient appropriate audit evidence due to restrictions imposed by group management; and

(b)                the possible effect of this inability will result in a disclaimer of opinion on the group financial report,[5]

the group engagement partner shall either:

           * in the case of a new engagement, not accept the engagement, or, in the case of a continuing engagement, withdraw from the engagement, where withdrawal is possible under applicable law or regulation; or

           * where law or regulation prohibits an auditor from declining an engagement or where withdrawal from an engagement is not otherwise possible, having performed the audit of the group financial report to the extent possible, disclaim an opinion on the group financial report.  (Ref: Para. A13‑A19)

Terms of Engagement

14.               The group engagement partner shall agree on the terms of the group audit engagement in accordance with ASA 210.[6]  (Ref: Para. A20‑A21)

Overall Audit Strategy and Audit Plan

15.               The group engagement team shall establish an overall group audit strategy and shall develop a group audit plan in accordance with ASA 300.[7]

16.               The group engagement partner shall review the overall group audit strategy and group audit plan.  (Ref: Para. A22)

Understanding the Group, Its Components and Their Environments

17.               The auditor is required to identify and assess the risks of material misstatement through obtaining an understanding of the entity and its environment, the applicable financial reporting framework and the system of internal control.[8]  The group engagement team shall:

(a)                Enhance its understanding of the group, its components, and their environments, including group‑wide controls, obtained during the acceptance or continuance stage; and

(b)                Obtain an understanding of the consolidation process, including the instructions issued by group management to components.  (Ref: Para. A23‑A29)

18.               The group engagement team shall obtain an understanding that is sufficient to:

(a)                Confirm or revise its initial identification of components that are likely to be significant; and

(b)                Assess the risks of material misstatement of the group financial report, whether due to fraud or error.[9]  (Ref: Para. A30‑A31)

Understanding the Component Auditors

19.               If the group engagement team plans to request a component auditor to perform work on the financial information of a component, the group engagement team shall obtain an understanding of the following:  (Ref: Para. A32‑A35)

(a)                Whether the component auditor understands and will comply with the ethical requirements that are relevant