Document ID: chunk:federal_register_of_legislation:F2023C00341:reg:4:p15
Version: federal_register_of_legislation:F2023C00341
Segment Type: reg
Provision Reference: reg 4 (pt 15/42)
Character Range: 50565–53779

For example, a component could be responsible for foreign exchange trading and thus expose the group to a significant risk of material misstatement, even though the component is not otherwise of individual financial significance to the group.

Component Auditor (Ref: Para. 9(b))

A7.             A member of the group engagement team may perform work on the financial information of a component for the group audit at the request of the group engagement team.  Where this is the case, such a member of the engagement team is also a component auditor.

Responsibility (Ref: Para. 11)

A8.             Although component auditors may perform work on the financial information of the components for the group audit and as such are responsible for their overall findings, conclusions or opinions, the group engagement partner or the group engagement partner's firm is responsible for the group audit opinion.

A9.             When the group audit opinion is modified because the group engagement team was unable to obtain sufficient appropriate audit evidence in relation to the financial information of one or more components, the Basis for Modification paragraph in the auditor's report on the group financial report describes the reasons for that inability without referring to the component auditor, unless such a reference is necessary for an adequate explanation of the circumstances.[15]

Acceptance and Continuance

Obtaining an Understanding at the Acceptance or Continuance Stage (Ref: Para. 12)

A10.         In the case of a new engagement, the group engagement team's understanding of the group, its components, and their environments may be obtained from:

           * Information provided by group management;

           * Communication with group management; and

           * Where applicable, communication with the previous group engagement team, component management, or component auditors.

A11.         The group engagement team's understanding may include matters such as the following:

           * The group structure, including both the legal and organisational structure (that is, how the group financial reporting system is organised).

           * Components' business activities that are significant to the group, including the industry and regulatory, economic and political environments in which those activities take place.

           * The use of service organisations, including shared service centres.

           * A description of group‑wide controls.

           * The complexity of the consolidation process.

           * Whether component auditors that are not from the group engagement partner's firm or network will perform work on the financial information of any of the components, and group management's rationale for appointing more than one auditor.

           * Whether the group engagement team:

                   + Will have unrestricted access to those charged with governance of the group, group management, those charged with governance of the component, component management, component information, and the component auditors (including relevant audit documentation sought by the group engagement team); and

                   + Will be able to perform