(2) Evaluate whether all components have been
These
included in the group financial statements.
(3) Evaluate the appropriateness, completeness
and accuracy of consolidation adjustments and
reclassifications.
(4) Evaluate whether any fraud risk factors or
indicators of possible management bias exist.
(5) Evaluate whether the financial information of
a component that has been prepared based on
different accounting policies applied to the
group financial statements is appropriately
adjusted for purposes of preparing and
presenting the group financial statement.
(6) Determine whether the financial information
identified in the component auditor's
communication is the financial information that
is incorporated in the group financial
statements.
(7) Evaluate whether appropriate adjustments
have been made to component financial
statements that have a different financial
reporting period-end from that of the group.
Subsequent Events
The group engagement team or component
auditors should perform procedures on the
financial information of components designed
to identify events at the component level that
occur between the dates of the financial
information of the components and the date of
the auditor's report on the group financial
statements that may require adjustment to or
disclosure in the group financial statements.
The group engagement team should, if
component auditors perform work other than
audits of the financial information of
components, request the component auditors to
notify them if they become aware of subsequent
events that may require an adjustment to or
disclosure in the group.
Communication Between Auditors
The effective and efficient conduct of a group
audit is directly and importantly affected by the
quality of two-way communication between the
group engagement team and component
auditors. The group engagement team should
clearly communicate its requirements to
component auditors on a timely basis.
requirements include the scope of work to be
performed by the component auditor and the
required form and content of communications
from the component auditor to the group
auditor. Communications from component
auditors are particularly important since they
constitute all, or a substantial portion of, the
evidence used by the group auditor in forming
the group audit opinion.
Communications to component auditor. The
group engagement team should communicate
its requirements to the component auditors on a
timely basis. This communication shall set out
the work to be performed, the use to be made of
that work and the form and content of the
component auditor communications with the
group engagement team. It shall also include the
following:
(1) A request that the component auditors,
knowing the context in which the group
engagement team will use their work,
confirm that they will cooperate with the
group engagement team.
(2) The ethical requirements that are
relevant to the group audit and the
independence requirements.
(3) Identified significant risks of material
misstatement of the group financial
statements, whether due to fraud or
errors, that are relevant to the work of the
component auditor. The group
engagement team shall request the
component auditor to communicate on a
timely basis any other identified
significant risks of material
misstatement of the group financial
statements, due to fraud or error, in the
component, and its responses to such
risks.
(4) A list of related parties prepared by group
management, and any other related
parties of which the group engagement
team is aware. The group engagement
team shall request the component
auditor to communicate, on a timely
basis, whether there are any related
parties that neither group management
nor group engagement team have
previously identified. The group
engagement team shall determine
whether to identify such additional
 related parties to other component
auditors.
(5) In the case of an audit or review of the
financial information of the component,
component materiality (and, if
applicable, the materiality level or levels
for particular classes of transactions,
account balances or disclosures) and the
threshold above which misstatements
cannot be regarded as clearly trivial to the
group financial statements.
Communications from component auditor. The
group engagement team should request the
component auditor to communicate matters
relevant to its conclusion with regard the group
audit. Such communication shall include:
(1) Whether the component auditors have
complied with ethical requirements that
are relevant to the group audit, including
independence and professional
competence.
(2) Whether the component auditors have
complied with the group engagement
team's requirements.
(3) Which component financial information
the component auditors are reporting on.
(4) Information on instances of non-
compliance with laws or regulations that
could give rise to a material
misstatement of the group financial
statements.
(5) A list of uncorrected misstatements of
the component's financial information
(the list need not include misstatements
that are below the threshold for clearly
trivial misstatements communicated by
the group engagement team).
(6) Indicators of possible management bias.
(7) Description of any identified significant
deficiencies in internal control over
financial.
(8) Other significant matters that the
component auditors communicated or
expect to communicate to those charged
with governance of the component,
including fraud or, suspected fraud
involving component management,
employees who have significant roles in
internal control at the component level or
others where the fraud resulted in a
material misstatement of the financial
information of the component.
(9) Any other matters that may be relevant to
the group audit or that the component
auditors wish to draw to the attention of
the group engagement team, including
exceptions noted in the written
representations that they requested from
component management.
(10) The component auditors' overall
findings, conclusions or opinion.
Evaluating the Sufficiency and Appropriateness
of Audit Evidence Obtained
Evaluating the component auditor's
communication and adequacy of their work. The
group engagement team should:
I. Evaluate the component auditor's
communication. The group engagement
team should discuss significant matters
arising from that evaluation with the
component auditor, component
management or group management, as
appropriate, and determine whether it is
necessary to review other relevant parts
of the component auditors' audit
documentation.
II. When the work of the component auditor
is found insufficient, determine
additional procedures to be performed
and whether they are to be performed by
the component auditor or by the group
engagement team.
Sufficiency and appropriateness of audit
evidence. The group engagement team should
evaluate whether sufficient appropriate audit
evidence has been obtained from the audit
procedures performed on the consolidation
process and the work performed by the group
engagement team and the component auditors
on the financial information of the components
to support the group audit opinion.
The group engagement partner should evaluate:
(1) The effect of any uncorrected misstatements
(either identified by the group engagement team
or communicated by component auditors) on
the group audit opinion.
(2) Any instances in which there have been an
inability to obtain sufficient appropriate audit
evidence.
Communications Between Group Auditors and
Group Management and Those Charged with
Governance
Communications on group audits are not just
about group engagement team and component
auditors. The group engagement team need to
communicate a number of specifically group
related matters to group management and those
charged with governance of the group.
 Communication with group management
The group engagement team should
communicate to group management material
weaknesses and significant deficiencies in the
design or operating effectiveness of group-wide
internal control that are relevant to the group,
regardless of whether they are identified by
group auditors or brought to their attention by
component auditors. The group engagement
team should make the determination of which of
these material weaknesses and significant
deficiencies should be communicated to group
management.
Any indication of fraud at group or component
level also needs to be communicated on a timely
basis to the appropriate level of group
management.
Where component auditors report on component
financial statements, group auditors are
required to request group management to
inform component management about anything
group engagement team are aware of that may
be significant to the component’s financial
statements, but which component management
may be unaware of. If group management
declines to do this – group engagement team
discuss the matter with those charged with
governance of the group. If the matter remains
unresolved, group engagement team consider
whether to advise component auditors not to
issue a report on the financial statements of the
component.
 Communication with those charged with
governance of the group
In addition to the communications with those
charged with those charged with governance
required in other auditing standards, the group
engagement team should communicate the
following matters with those charged with
governance of the group:
(1) An overview of the type of work to be
performed on the component’s financial
information.
(2) An overview of the group engagement
team's planned involvement in the work
of component auditors on significant
components e.g., whether they intended
to visit the component, review files or
attend meetings with component
auditors.
(3) Instances in which there is concerns
about the quality of a component
auditor’s work.
(4) Any limitations, if any, in the scope of the
group audit e.g., where access to
component auditor working papers has
been denied.
(5) Fraud or suspected fraud involving group
management, component management,
employees who have significant roles in
group-wide controls or others where the
fraud resulted in a material
misstatement.
Documentation
The following documentation is required in a
group audit, in addition to the other
documentation requirements of other auditing
standards:
(1) An analysis of components, indicating
those that are significant, and the type of
work performed on the financial
information of the components.
(2) The nature, timing and extent of the
group engagement team's involvement in
the work performed by the component
auditors on significant components
including, where applicable, the group
engagement team's review of relevant
parts of the component auditors' audit
documentation and conclusions thereon.
(3) Written communications between the
group engagement team and component
auditors concerning the group
engagement team's requirements.
USING THE WORK OF AN AUDITOR'S EXPERT
In some instances, the auditor may need to
obtain, in conjunction with the entity or
independently, audit evidence in the form of
reports, opinions, valuations and statements of
an expert (specialist). The auditor's education
and experience enable the auditor to be