The Information System and CommunicationThe Information System and Communication

The Information System and Communication

1. The group auditor’s understanding of the group’s information system and communication may include matters such as the following:

• The extent of centralisation in the group’s IT environment and the commonality of IT applications, IT processes and IT infrastructure.
• Group management’s monitoring of operations and the financial results of entities or business units in the group, including regular reporting routines, which enables group management to monitor performance against budgets, and to take appropriate action.
• 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 evaluating the accuracy and completeness of financial information received from entities or business units in the group.

Consolidation Process

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

Matters Relating to the Applicable Financial Reporting Framework

• The extent to which management of entities or business units in the group have an understanding of the applicable financial reporting framework.
• The process for identifying and accounting for entities or business units in the group in accordance with the applicable financial reporting framework.
• The process for identifying reportable segments for segment reporting in accordance with the applicable financial reporting framework.
• The process for identifying related party relationships and related party transactions for reporting in accordance with the applicable financial reporting framework.
• The accounting policies applied to the group financial report, changes from those of the previous financial year, and changes resulting from new or revised standards under the applicable financial reporting framework.
• The procedures for dealing with entities or business units in the group with financial year-ends different from the group’s year-end.

Matters Relating to the Consolidation Process

• Group management’s process for obtaining an understanding of the accounting policies used by entities or business units in the group, and, when applicable, ensuring that uniform accounting policies are used to prepare the financial information of the entities or business units in the group for the group financial report, and that differences in accounting policies are identified, and adjusted when required in terms of the applicable financial reporting framework. Uniform accounting policies are the specific principles, bases, conventions, rules, and practices adopted by the group, based on the applicable financial reporting framework, that the entities or business units in the group use to report similar transactions consistently. These policies are ordinarily described in the financial reporting procedures manual and reporting package issued by group management.