Group audits - more detail

What is a significant component of a group under ISA 600?

A component of individual financial significance to the group

One that is audited by auditors other than the group engagement team

One that meets either a. or b. definition

One that is likely to include significant risk at group financial statements level, due to its specific nature or circumstances

What type of procedures should the group audit team, or a component auditor on its behalf, perform for a component of individual financial significance?

A review of the financial information using component materiality

An audit of specific account balances, classes of transactions or disclosures relevant to the significant assessed risks

An audit of the financial information using component materiality

Specific audit procedures relating to the significant assessed risks of material misstatement

What type of procedures should the group audit team, or a component auditor on its behalf, perform for a component that is significant because of the risk attached to its specific nature or circumstances?

An audit of specific account balances, classes of transactions or disclosures relevant to the significant assessed risks

An audit of the financial information using component materiality

One or more of the above

Specific audit procedures relating to the significant assessed risks of material misstatement

How are the group engagement teams’ requirements normally communicated to the component auditor?

Included in a letter of representation

In a memorandum or report of work performed

Verbally at the first opportunity

Included in a letter of instruction

At what level should component materiality be set?

At any appropriate level

At a higher level than group materiality

At a lower level than group materiality

At the same level of group materiality

What type of materiality should be set by the group auditor?

Group materiality and component materiality

Group and component materiality and, if appropriate, materiality for particular classes of transactions, balances or disclosures

Group materiality

Group materiality and materiality for particular classes of transactions, balances or disclosures

Which of the following is required to be documented under ISA 600?

The involvement in the work of significant components’ auditors

Communications of the group audit team’s instructions

An analysis of components in terms of significance and work performed

All of the above

What is the peculiar audit risk of group audits?

That components may apply different accounting standards

That a component auditor may not detect a misstatement that could result in the group financial statements being materially misstated

That a component auditor may be located overseas

There is no peculiar risk for group audits

Who is responsible for setting component materiality?

Is fixed by ISA 600 at a percentage of group materiality

The group audit team

The group audit team and the component auditor jointly

The component auditor

What involvement, as a minimum, should the group auditor have in the work of a significant component auditor?

Design and perform audit procedures with him

None, he should rely on his professional competence and independence

Review his overall audit strategy and plan

Take part to his risk assessment exercise, evaluate audit procedures, assess his memorandum and, if necessary, review other parts of his documentation

Group audits - more detail

What is a significant component of a group under ISA 600?

What type of procedures should the group audit team, or a component auditor on its behalf, perform for a component of individual financial significance?

What type of procedures should the group audit team, or a component auditor on its behalf, perform for a component that is significant because of the risk attached to its specific nature or circumstances?

How are the group engagement teams’ requirements normally communicated to the component auditor?

At what level should component materiality be set?

What type of materiality should be set by the group auditor?

Which of the following is required to be documented under ISA 600?

What is the peculiar audit risk of group audits?

Who is responsible for setting component materiality?

What involvement, as a minimum, should the group auditor have in the work of a significant component auditor?

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