Examples of Matters about Which the GrouExamples of Matters about Which the Group Engagement Team Obtains an Understanding

Examples of Matters about Which the Group Engagement Team Obtains an Understanding

The examples provided cover a broad range of matters; however, not all matters are relevant to every group audit engagement and the list of examples is not exhaustive.

Group‑Wide Controls

1. Group‑wide controls may include a combination of the following:

• Regular meetings between group and component management to discuss business developments and to review performance.
• Monitoring of components’ operations and their financial results, including regular reporting routines, which enables group management to monitor components’ performance against budgets, and to take appropriate action.
• Group management’s risk assessment process, that is, the process for identifying, analysing and managing business risks, including the risk of fraud, that may result in material misstatement of the group financial report.
• Monitoring, controlling, reconciling, and eliminating intra‑group transactions and unrealised profits, and intra‑group account balances at group level.
• A process for monitoring the timeliness and assessing the accuracy and completeness of financial information received from components.
• A central IT system controlled by the same general IT controls for all or part of the group.
• Controls within an IT system that is common for all or some components.
• Controls within the group’s process to monitor the system of internal control, including activities of the internal audit function and self‑assessment programs.
• Consistent policies and procedures, including a group financial reporting procedures manual.
• Group‑wide programs, such as codes of conduct and fraud prevention programs.
• Arrangements for assigning authority and responsibility to component management.

1. The internal audit function may be regarded as part of group‑wide controls, for example, when the function is centralised. ASA 610[26] deals with the group engagement team’s evaluation of whether the internal audit function’s organisational status and relevant policies and procedures adequately supports the objectivity of internal auditors, the level of competence of the internal audit function, and whether the function applies a systematic and disciplined approach where the group engagement team expects to use the function’s work.

Consolidation Process

1. The group engagement team’s understanding of the consolidation process may include matters such as the following:

Matters relating to the applicable financial reporting framework: