Audits of Group Financial Statements

Question 1

What are the auditors objectives of group financial statements?

Answer 1

• Determine whether to act as the auditor of the group financial statements and if so
  1) Determine whether to make reference to the audit of a component auditor
  2) To communicate clearly with component auditors
  3) Obtain sufficient audit evidence to express an opinion

Question 2

what is the group engagement partner responsible for?

Answer 2

• Direction, supervision, and performance of the group audit engagement in compliance with professional standards, applicable regulatory and legal requirements, and the firm’s policies and procedures.
• Determine whether the auditor’s report is appropriate in the circumstances

Question 3

Does the group team determine component materiality?

Answer 3

YES, also what is considered trivial

Question 4

Reference should not be made unless:

Answer 4

1) The components use the same framework
2) complied with GAAS
3) Component auditor has issued a report that is not restricted as to use
4) Group engagement team should read the component F/S to identify any significant findings
5) If engagement partner assumes responsibility, they do not reference the component auditors

Question 5

If you do include reference to the component auditors, where is it stated in the audit report?

Answer 5

First paragraph of auditors responsibility

Opinion Paragraph

Question 6

What are the documentation for the group engagement team for consolidated f/s?

Answer 6

• Analysis of components indicating those items that are significant
• Those components for which reference to the component auditors report were made in the auditors report
• Written communications between group engagement team and the component auditors about the group engagement
• F/S of the component and the report of the component auditor