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GROUP AUDIT - Coggle Diagram
GROUP AUDIT
What to check if work of component auditor is questionable
adequacy of the audit program
scope of work covered by component auditor
existence of proper documentation of audit work carried out by the component auditor
whether appropriate test of control and substantive procedures have been performed
whether adequate audit evidence are obtained
whether work carried out by engagement team are being adequately reviewed
Factors to be considered in relying in the work of component auditor
whether group engagement partner will be able to involved in the work of component auditor to extent necessary to obtain sufficient appropriate audit evidence
whether component auditor operates in a regulatory environment that actively oversees auditor
component auditor's professional competence
scope of work of component auditor
whether component auditor comply with the ethical requirement and standards that are relevant to the group audit
Scope of work of group engagement partner depend on
any significant changes of component condition, business and profitability
inherent risk assessment of subsidiaries by group engagement partner
any problem encounter in the past
materiality of component compared to group as a whole
scope of work of component auditor
Responsibility of group engagement partner
whether he has satisfied that the account of the subsidiaries that are consolidated in form and content appropriate and proper
whether has received satisfactory information and explanation
whether consolidated accounts reflect a true and fair view of group financial performance and position
whether the auditor's report on accounts of any subsidiary was made subject to any qualification
report names of subsidiaries of which he has not acted as auditors
Procedures to obtain sufficient evidence
Preliminary stage
ending balance
check accounting treatment for gain or loss on disposal
additional or disposal of investment
confirmation of existence and ownership of investment
opening balance of investment in subsidiary
obtained audited account or management financial statement of each component
Detailed audit work
goodwill or reverse arising on consolidation
pre and post acquisition reserve
overall reconciliation and movement
calculation of minority interest
Review of component auditor's working paper
working paper is comprehensive
financial statement follow accounting standard
identify inter group transaction
Questionnaires
balance sheet item
profit and loss items
basis of accounting policies
What to be documented
significance of findings to entity as a whole
names of component auditors
financial statement of components
audit procedures performed and conclusion for each findings
Challenges
culture
differences in accounting and auditing conventions and legislations
language