Document ID: chunk:federal_register_of_legislation:F2025C00096:body:0:p48
Version: federal_register_of_legislation:F2025C00096
Segment Type: other
Provision Reference: 
Character Range: 137709–140898

communicating misstatements to the group auditor is set at an amount equal to, or lower than, the amount regarded as clearly trivial for the group financial report.  In accordance with ASA 450,[83] this threshold is the amount below which misstatements would not need to be accumulated because the group auditor expects that the accumulation of such amounts clearly would not have a material effect on the group financial report.

Considerations When Component Auditors Are Involved

Communicating Component Performance Materiality (Ref: Para. 36)

 1.       In some cases, it may be appropriate for the group auditor to involve the component auditor in determining an appropriate component performance materiality amount, in view of the component auditor's knowledge of the component and potential sources of misstatement of the component financial information.  In this regard, the group auditor also may consider communicating group performance materiality to the component auditor to support collaboration in determining whether component performance materiality, in relation to group performance materiality, is appropriate in the circumstances.

 2.       Component performance materiality is based, at least in part, on expectations about the nature, frequency, and magnitude of misstatements in the component financial information.  Therefore, ongoing communication between the component auditor and the group auditor is important, particularly if the number and magnitude of misstatements identified by the component auditor are higher than expected.

Responding to the Assessed Risks of Material Misstatement (Ref: Para. 37)

Performing Further Audit Procedures

Performing Further Audit Procedures Centrally

 1.       Further audit procedures may be designed and performed centrally if the audit evidence to be obtained from performing further audit procedures on one or more significant classes of transactions, account balances or disclosures in the aggregate will respond to the assessed risks of material misstatement, for example, if the accounting records for the revenue transactions of the entire group are maintained centrally (e.g., at a shared service centre).  Factors that may be relevant to the auditor's determination of whether to perform further audit procedures centrally include, for example:

           * The level of centralisation of activities relevant to financial reporting.

           * The nature and extent of commonality of controls.

           * The similarity of the group's activities and business lines.

 1.       The group auditor may determine that the financial information of several components can be considered as one population for the purpose of performing further audit procedures, for example, when transactions are considered to be homogeneous because they share the same characteristics, the related risks of material misstatement are the same, and controls are designed and operating in a consistent way.

 2.       When further audit procedures are performed centrally, component auditors may still be involved.  For example, when the group has multiple shared service centres, the group auditor may involve component auditors