Document ID: chunk:federal_register_of_legislation:F2025C00096:body:0:p46
Version: federal_register_of_legislation:F2025C00096
Segment Type: other
Provision Reference: 
Character Range: 131840–135004

more susceptible to risks of material misstatement due to fraud.

           * Whether any fraud risk factors or indicators of management bias exist in the consolidation process.

           * How those charged with governance of the group monitor group management's processes for identifying and responding to the risks of fraud in the group, and the controls group management has established to mitigate these risks.

           * Responses of those charged with governance of the group, group management, appropriate individuals within the internal audit function (and when appropriate, component management, the component auditors, and others) to the group auditor's enquiry about whether they have knowledge of any actual, suspected, or alleged fraud affecting a component or the group.

Considerations When Component Auditors Are Involved (Ref: Para. 34)

 1.       When the group auditor involves component auditors in the design and performance of risk assessment procedures, the group auditor remains responsible for having an understanding of the group and its environment, the applicable financial reporting framework and the group's system of internal control to have a sufficient basis for the identification and assessment of the risks of material misstatement of the group financial report in accordance with paragraph 33.

 2.       When the audit evidence obtained from the risk assessment procedures does not provide an appropriate basis for the identification and assessment of the risks of material misstatement, ASA 315[80] requires the auditor to perform additional risk assessment procedures until audit evidence has been obtained to provide such a basis.

Materiality

Component Performance Materiality (Ref: Para. 35(a))

 1.       Paragraph 35(a) requires the group auditor to determine component performance materiality for each of the components where audit procedures are performed on financial information that is disaggregated.  The component performance materiality amount may be different for each component.  Also, the component performance materiality amount for an individual component need not be an arithmetical portion of the group performance materiality and, consequently, the aggregate of component performance materiality amounts may exceed group performance materiality.

 2.       This ASA does not require component performance materiality to be determined for each class of transactions, account balance or disclosure for components at which audit procedures are performed.  However, if, in the specific circumstances of the group, there is one or more particular classes of transactions, account balances or disclosures for which misstatements of lesser amounts than materiality for the group financial report as a whole could reasonably be expected to influence the economic decisions of users taken on the basis of the group financial report, ASA 320[81] requires a determination of the materiality level or levels to be applied to those particular classes of transactions, account balances or disclosures.  In these circumstances, the group auditor may need to consider whether a component performance materiality