Group dynamics - how much work is enough?
How much work is enough for group audit purposes when a significant group component is audited by someone other than the group auditor? This question is being posed with increasing frequency.
The process is the same, irrespective of who audits each component.
The group engagement team must assess the risk of material misstatement in the group accounts – that is for the group as a whole. They will need to communicate with the component auditors concerning risks (at a group level) that arise in those components. The group engagement team will therefore need to be involved in the work of the component auditor in sufficient detail to ensure that the risk assessment for the component identifies all issues that may be relevant at group level. This will include considering whether the materiality set for the component financial statements and the performance materiality used by the component auditors are appropriate from a group perspective.