| 40. | The group engagement team shall communicate its requirements to the component auditor 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's communication with the group engagement team. It shall also include the following: (Ref: Para. A57, A58, A60) |
| (a) | A request that the component auditor, knowing the context in which the group engagement team will use the work of the component auditor, confirms that the component auditor will cooperate with the group engagement team. (Ref: Para. A59) |
| (b) | The ethical requirements that are relevant to the group audit and, in particular, the independence requirements. |
| (c) | 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. |
| (d) | Identified significant risks of material misstatement of the group financial statements, due to fraud or error, 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 the component auditor's responses to such risks. |
| (e) | 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 related parties not previously identified by group management or the group engagement team. The group engagement team shall determine whether to identify such additional related parties to other component auditors. |
| 41. | The group engagement team shall request the component auditor to communicate matters relevant to the group engagement team's conclusion with regard to the group audit. Such communication shall include: (Ref: Para. A60) |
| (a) | Whether the component auditor has complied with ethical requirements that are relevant to the group audit, including independence and professional competence; |
| (b) | Whether the component auditor has complied with the group engagement team's requirements; |
| (c) | Identification of the financial information of the component on which the component auditor is reporting; |
| (d) | Information on instances of non-compliance with laws or regulations that could give rise to a material misstatement of the group financial statements; |
| (e) | A list of uncorrected misstatements of the financial information of the component (the list need not include misstatements that are below the threshold for clearly trivial misstatements communicated by the group engagement team (see paragraph 40(c)); |
| (f) | Indicators of possible management bias; |
| (g) | Description of any identified significant deficiencies in internal control at the component level; |
| (h) | Other significant matters that the component auditor communicated or expects 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; |
| (i) | Any other matters that may be relevant to the group audit, or that the component auditor wishes to draw to the attention of the group engagement team, including exceptions noted in the written representations that the component auditor requested from component management; and |
| (j) | The component auditor's overall findings, conclusions or opinion. |
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