GROUP AUDITS Flashcards
Groups basics
-parent
-subsidary
50% or more voting rights
# of ppl on board
ability to influence decision making
required accounting: consolidate results of sub / acquisition accounting
100% assets and liabilities, sales and costs are brought together
if there’s NCI, we reflect that in FS
joint venture
joint decision making and joint control with another party
equity accounting
our share of results
associate - significant influence but not control 20-49%, no consolidation, we do equity accounting
goodwill
when we r paying more to acquire the share
more than FV of net assets
the premium
commonly tested
typical issues in exam
-incorrect classification (sub vs. associate)
-consolidation errors (diff reporting dates/ FR framework)
-RP transactions (disclosures)
-goodwill impairment
-component auditorsc
component auditors
-reputation / experience
-competence / qualifications
-objectivity / independence
-regulatory environment (diff country)
-ability to review the work of component auditor, is it logistically possible
group auditor work required when assessing work of component auditor
1- assess component auditor (can we work w them)
2-send them instructions on how we expect them to perform audit and report to us:
- ethical requirements
-materiality requirments set by group auditor
-significant risk of MM
-list of RP
-reporting format, expectation of results
3- review the reporting received from component auditor
significant component identification
-financial metric 15% or more (revenue, profit, total assets)
-non financial factors (strategic significance)
extra care cuz: big part - over reliance - group opniion will be impacted
if significant:
1- review audit files of component auditor
2- assess if evidence is sufficient to support conclusions
3- gather further evidence if needed
KISS
K-keep
It
Simple
Short
tips
revise sbr
questions stow rider magnolia theo and co
on study hub revision questions bank
