Statement on Auditing Standards - Special Considerations - Audits of Group Financial Statements (Including the Work of Component Auditors)

Article excerpt

(Supersedes Statement on Auditing Standards (SAS) No. 1 section 543, Part of Audit Performed by Other Independent Auditors [AICPA, Professional Standards, vol. 1, AU sec. 543], and paragraphs .12-.13 of SAS No. 58, Reports on Audited Financial Statements [AICPA, Professional Standards, vol. 1, AU sec. 508, par. .12-.13])

CONTENTS

Introduction

Scope of This Statement on Auditing Standards/1-8

Effective Date/9

Objectives/10

Definitions/11-12

Requirements

Responsibility/13

Acceptance and Continuance/14-17

Overall Audit Strategy and Audit Plan/18-19

Understanding the Group, Its Components, and Their Environments/20-21

Understanding a Component Auditor/22-23

Determining Whether to Make Reference to a Component Auditor in the Auditor's Report on the Group Financial Statements/24-30

Materiality/31

Responding to Assessed Risks/32

Consolidation Process/33-38

Subsequent Events/39

Communication With a Component Auditor/40-41

Evaluating the Sufficiency and Appropriateness of Audit Evidence Obtained/42-44

Communication With Group Management and Those Charged With Governance of the Group/45-48

Documentation/49

Additional Requirements Applicable When Assuming Responsibility for the Work of a Component Auditor/50-64

Application and Other Explanatory Material Definitions/A1-Al2

Responsibility/A13-A14

Acceptance and Continuance/A15-A29

Overall Audit Strategy and Audit Plan/A30

Understanding the Group, Its Components, and Their Environments/A31-A39

Understanding a Component Auditor/A40-A51

Determining Whether to Make Reference to a Component Auditor in the Auditor's Report on the Group Financial Statements/A52-A59

Materiality/A60-A64

Responding to Assessed Risks/A65

Consolidation Process/A66

Subsequent Events/A67

Evaluating the Sufficiency and Appropriateness of Audit Evidence Obtained/A68-A69

Communication With Group Management and Those Charged With Governance of the Group/A70-A72

Additional Requirements Applicable When Assuming Responsibility for the Work of a Component Auditor/A73-A90

Exhibit A: Illustrations of Auditor's Reports on Group Financial Statements/A91

Exhibit B: Understanding the Group, Its Components, and Their Environments-Examples of Matters About Which the Group Engagement Team Obtains an Understanding/A92

Exhibit C: Examples of Conditions or Events That May Indicate Risks of Material Misstatement of the Group Financial Statements/A93

Exhibit D: Examples of a Component Auditor's Confirmations/A94

Exhibit E: Sources of Information/A95

Exhibit F: Required and Additional Matters Included in the Group Engagement Team's Letter of Instruction/A96

Exhibit G: Comparison of Statement on Auditing Standards Special Considerations --Audits of Group Financial Statements (Including the Work of Component Auditors) With International Standard on Auditing 600, Special Considerations--Audits of Group Financial Statements (Including the Work of Component Auditors)/A97

INTRODUCTION

Scope of This Statement on Auditing Standards

1. Generally accepted auditing standards (GAAS) apply to group audits. This Statement on Auditing Standards (SAS) addresses special considerations that apply to group audits, in particular those that involve component auditors.

2. An auditor may find this SAS, adapted as necessary in the circumstances, useful when that auditor involves other auditors in the audit of financial statements that are not group financial statements. For example, an auditor may involve another auditor to observe the inventory count or inspect physical fixed assets at a remote location. …