ACCA AAA ^INT Syllabus D. Audit of Historical Financial Information - Should we accept the job? - Notes ^{1 / 8}

What are "Components"?

• Subsidiaries

• Associates

So what are the problems?

• Principle auditor may rely on the work of component auditors

• Complex groups mean a complex audit

• Consolidation adjustments must comply with the specific accounting standards applicable

So what are the considerations before accepting a role as principal auditor

• Materiality of the portion to be audited

• Degree of Knowledge of the components

• Risk of material misstatement of the components

• Any additional procedures required on components

• Relationship with other auditors

The principal auditor will have to gather sufficient, appropriate evidence to form an opinion on the consolidated financial statements.

In complex groups, perhaps having up to 50 subsidiaries, this is no easy task