Guide to Using International Standards on Auditing in - IFAC

More documents

Recommendations

Info

190 <strong>Guide</strong> <strong>to</strong> <strong>Using</strong> <strong>International</strong> <strong>Standards</strong> on Auditing in the Audits of Small- and Medium-Sized Entities Volume 1—Core Concepts CONSIDER POINT The definition of a group component is broad. Before concluding that this standard is not applicable, ensure that a significant component does not in fact exist. A component could result from the entity’s organizational structure (such as subsidiaries, divisions, branches, joint ventures, or investees accounted for by the equity or cost methods of accounting) or financial reporting systems organized by function, product, service, or geographical location. If a significant component exists, this standard outlines a number of requirements relating <strong>to</strong>: • Responsibility of the group engagement partner; • Audit planning and materiality; • Risk assessment and response; • Relationships between the group engagement team and component audi<strong>to</strong>rs; • Nature and extent of communications; and • Group-wide controls and the consolidation process. Note: On the assumption that group audits are not that common in the audit of SMEs, the following exhibit contains only extracts from the many requirements contained in the standard. Exhibit 15.6-1 Responsibility 600.11 Acceptance/ Continuance and Planning 600.12-16 Summarized Extracts from the Requirements Section • The group engagement partner is responsible for the direction, supervision and performance of the group audit engagement in compliance with professional standards. • The audi<strong>to</strong>r’s report on the group financial statements shall not refer <strong>to</strong> a component audi<strong>to</strong>r. • The group engagement team shall obtain an understanding of the group, its components, and their environments that is sufficient <strong>to</strong> identify components that are likely <strong>to</strong> be significant components. • The group engagement partner shall agree on the terms of the group audit engagement. • The group engagement team shall establish an overall group audit strategy, and shall develop a group audit plan. Understanding the Group, Its Components and Their Environments 600.17-18 The group engagement team shall obtain an understanding that is sufficient <strong>to</strong>: • Confirm or revise its initial identification of components that are likely <strong>to</strong> be significant; and • Assess the risks of material misstatement of the group financial statements, whether due <strong>to</strong> fraud or error.
191 <strong>Guide</strong> <strong>to</strong> <strong>Using</strong> <strong>International</strong> <strong>Standards</strong> on Auditing in the Audits of Small- and Medium-Sized Entities Volume 1—Core Concepts Understanding the Component Audi<strong>to</strong>r 600.19-20 Materiality 600.21-23 Responding <strong>to</strong> Assessed Risks 600.24-31 Summarized Extracts from the Requirements Section If the group engagement team plans <strong>to</strong> request a component audi<strong>to</strong>r <strong>to</strong> perform work on the financial information of a component, the group engagement team shall obtain an understanding of: • Whether the component audi<strong>to</strong>r understands and will comply with the ethical requirements that are relevant <strong>to</strong> the group audit and, in particular, is independent; • The component audi<strong>to</strong>r’s professional competence; • Whether the group engagement team will be able <strong>to</strong> be involved in the work of the component audi<strong>to</strong>r <strong>to</strong> the extent necessary <strong>to</strong> obtain sufficient appropriate audit evidence; and • Whether the component audi<strong>to</strong>r operates in a regula<strong>to</strong>ry environment that actively oversees audi<strong>to</strong>rs. The group engagement team shall determine: • Materiality for the group financial statements as a whole when establishing the overall group audit strategy; • Lower amounts than group materiality, where applicable, for particular classes of transactions, account balances, or disclosures; • Component materiality for those components where component audi<strong>to</strong>rs will perform an audit or a review for purposes of the group audit; and • The threshold above which misstatements cannot be regarded as clearly trivial <strong>to</strong> the group financial statements. The group team shall also evaluate the appropriateness of performance materiality determined by the component audi<strong>to</strong>r at the component level. The audi<strong>to</strong>r is required <strong>to</strong> design and implement appropriate responses <strong>to</strong> address the assessed risks of material misstatement of the financial statements. The group engagement team shall: • Determine the type of work <strong>to</strong> be performed by the group engagement team, or the component audi<strong>to</strong>rs on its behalf, on the financial information of the components; • Evaluate the appropriateness of further procedures <strong>to</strong> respond <strong>to</strong> identified significant risks of material misstatement of the group financial statements; and • Evaluate the appropriateness, completeness, and accuracy of consolidation adjustments and reclassifications, and shall evaluate whether any fraud risk fac<strong>to</strong>rs or indica<strong>to</strong>rs of possible management bias exist. For a component that is significant due <strong>to</strong> its individual financial significance <strong>to</strong> the group, the group engagement team, or a component audi<strong>to</strong>r on its behalf, shall perform an audit of the financial information of the component using component materiality.
Page 1 and 2:
Guide to</
Page 3 and 4:
3 Guide to
Page 5 and 6:
5 Guide to
Page 7 and 8:
Disclaimer This Guide</stro
Page 9 and 10:
9 Guide to
Page 11 and 12:
11 Guide t
Page 13 and 14:
13 2. Clarified ISAs In March 2009,
Page 15 and 16:
15 Guide t
Page 17 and 18:
17 Guide t
Page 19 and 20:
Volume 1 Core Concepts
Page 21 and 22:
21 Guide t
Page 23 and 24:
23 Guide t
Page 25 and 26:
25 Guide t
Page 27 and 28:
27 Guide t
Page 29 and 30:
29 Guide t
Page 31 and 32:
31 Guide t
Page 33 and 34:
33 Guide t
Page 35 and 36:
35 Guide t
Page 37 and 38:
37 Guide t
Page 39 and 40:
39 Guide t
Page 41 and 42:
41 Guide t
Page 43 and 44:
43 Guide t
Page 45 and 46:
45 Guide t
Page 47 and 48:
47 Guide t
Page 49 and 50:
49 Guide t
Page 51 and 52:
51 5. Internal Control — Purpose
Page 53 and 54:
53 Guide t
Page 55 and 56:
55 Guide t
Page 57 and 58:
57 Guide t
Page 59 and 60:
59 Guide t
Page 61 and 62:
61 Guide t
Page 63 and 64:
63 Guide t
Page 65 and 66:
65 Guide t
Page 67 and 68:
67 Guide t
Page 69 and 70:
69 Guide t
Page 71 and 72:
71 Guide t
Page 73 and 74:
73 Guide t
Page 75 and 76:
75 Guide t
Page 77 and 78:
77 6. Financial Statement Assertion
Page 79 and 80:
79 Guide t
Page 81 and 82:
81 Guide t
Page 83 and 84:
83 Guide t
Page 85 and 86:
85 Guide t
Page 87 and 88:
87 Guide t
Page 89 and 90:
89 Guide t
Page 91 and 92:
91 Guide t
Page 93 and 94:
93 Guide t
Page 95 and 96:
95 Guide t
Page 97 and 98:
97 Guide t
Page 99 and 100:
99 Guide t
Page 101 and 102:
101 Guide
Page 103 and 104:
103 Guide
Page 105 and 106:
105 Guide
Page 107 and 108:
107 Guide
Page 109 and 110:
109 Guide
Page 111 and 112:
111 Guide
Page 113 and 114:
113 Guide
Page 115 and 116:
115 10. Further Audit Procedures Ch
Page 117 and 118:
117 Guide
Page 119 and 120:
119 Guide
Page 121 and 122:
121 Guide
Page 123 and 124:
123 Guide
Page 125 and 126:
125 Guide
Page 127 and 128:
127 Guide
Page 129 and 130:
129 Guide
Page 131 and 132:
131 Guide
Page 133 and 134:
133 Guide
Page 135 and 136:
135 Guide
Page 137 and 138:
137 Guide
Page 139 and 140: 139 Guide
Page 145 and 146: 145 12. Related Parties Chapter Con
Page 161 and 162: 161 14. Going Concern Chapter Conte
Page 171 and 172: 171 15. Summary of Other ISA Requir
Page 189: 189 Guide
Page 205 and 206: 205 16. Audit Documentation Chapter
show all

Guide to Using International Standards on Auditing in - IFAC

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?