Document ID: chunk:federal_register_of_legislation:F2025C00096:body:0:p51
Version: federal_register_of_legislation:F2025C00096
Segment Type: other
Provision Reference: 
Character Range: 146232–149351

assertions only.  For example, the group auditor may centrally test the class of transaction, account balance or disclosure and may require the component auditor to perform specific further audit procedures at the component (e.g., specific further audit procedures related to the valuation of claims or litigation in the component's jurisdiction or the existence of an asset).

Element of Unpredictability

 1.       Incorporating an element of unpredictability in the type of work to be performed, the entities or business units at which procedures are performed and the extent to which the group auditor is involved in the work, may increase the likelihood of identifying a material misstatement of the components' financial information that may give rise to a material misstatement of the group financial report due to fraud.[85]

Operating Effectiveness of Controls

 1.       The group auditor may rely on the operating effectiveness of controls that operate throughout the group in determining the nature, timing and extent of substantive procedures to be performed at either the group level or at the components.  ASA 330[86] requires the auditor to design and perform tests of controls to obtain sufficient appropriate audit evidence as to the operating effectiveness of those controls.  Component auditors may be involved in designing and performing such tests of controls.

 2.       If deviations from controls upon which the auditor intends to rely are detected, ASA 330[87] requires the auditor to make specific enquiries to understand these matters and their potential consequences.  If more deviations than expected are detected as a result of testing the operating effectiveness of the controls, the group auditor may need to revise the group audit plan.  Possible revisions to the group audit plan may include:

           * Requesting additional substantive procedures to be performed at certain components.

           * Identifying and testing the operating effectiveness of other relevant controls that are designed and implemented effectively.

           * Increasing the number of components selected for further audit procedures.

 1.       When the operating effectiveness of controls is tested centrally (e.g., controls at a shared service centre or testing of common controls), the group auditor may need to communicate information about the audit work performed to the component auditors.  For example, when a component auditor is requested to design and perform substantive procedures on the entire financial information of the component, or design and perform substantive procedures on one or more classes of transactions, account balances or disclosures, the component auditor may discuss with the group auditor about the control testing performed centrally to determine the nature, timing and extent of the substantive procedures.

Consolidation Process

Consolidation Procedures (Ref: Para. 38)

 1.       The further audit procedures on the consolidation process, including sub-consolidations, may include:

           * Determining that the necessary journal entries are reflected in