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ASA 600 - Special Considerations – Audits of a Group Financial Report (Including the Work of Component Auditors) - October 2009
Understanding the Group, Its Components Understanding the Group, Its Components and Their Environments
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Understanding the Group, Its Components and Their Environments
- The auditor is required to identify and assess the risks of material misstatement through obtaining an understanding of the entity and its environment, the applicable financial reporting framework and the system of internal control.[8] The group engagement team shall:
- Enhance its understanding of the group, its components, and their environments, including group‑wide controls, obtained during the acceptance or continuance stage; and
- Obtain an understanding of the consolidation process, including the instructions issued by group management to components. (Ref: Para. A23‑A29)
- The group engagement team shall obtain an understanding that is sufficient to:
- Confirm or revise its initial identification of components that are likely to be significant; and
- Assess the risks of material misstatement of the group financial report, whether due to fraud or error.[9] (Ref: Para. A30‑A31)