Group fs_ AA_Chapter_36

Group fs_ AA_Chapter_36 - Chapter 36 Audit of Group...

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© Peter T. Y. Lau and Nelson C. Y. Lam © Pilot Publishing Co. Ltd. 2009 Auditing and Assurance in Hong Kong 1 Chapter 36 Audit of Group Financial Statements
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© Peter T. Y. Lau and Nelson C. Y. Lam © Pilot Publishing Co. Ltd. 2009 Auditing and Assurance in Hong Kong 2 Agenda 1. Financial Reporting vs. Auditing 2. Objectives and Responsibilities in Group Audits 3. Preliminary Engagement Activities and Planning 4. Understanding The Entity Including Its Component 5. Understanding the Component Auditor 6. Auditor’s Responses to Assessed Risks 7. Consolidation Process 8. Subsequent Events 9. Communication with the Component Auditor 10. Evaluating Sufficiency and Appropriateness of Audi 11. Communication with Group Management 12. Documentation 13. Associates, JV and Parent
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© Peter T. Y. Lau and Nelson C. Y. Lam © Pilot Publishing Co. Ltd. 2009 Auditing and Assurance in Hong Kong 3 1. Financial Reporting vs. Auditing The financial reporting standards and accounting guideline relevant for a group include: HKFRS 3 Business Combinations HKAS 27 Consolidated and Separate Financial Statements HKAS 28 Investments in Associates HKAS 31 Interests in Joint Ventures AG 5 Merger Accounting for Common Control Combinations The auditor’s responsibilities on audit of group financial statements are the same as other audits, but additionally extends to consolidated financial statements.
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© Peter T. Y. Lau and Nelson C. Y. Lam © Pilot Publishing Co. Ltd. 2009 Auditing and Assurance in Hong Kong 4 1. Financial Reporting vs. Auditing HKAS 27 defines a group as “a parent and all its subsidiaries” but does not define group financial statements. Instead, HKAS 27 requires that, unless exemption is available to a parent, the parent is required to present consolidated financial statements, which are the financial statements of a group presented as those of a single economic entity. Strictly speaking, an associate or a jointly venture is not part of a group based on the above definition.
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© Peter T. Y. Lau and Nelson C. Y. Lam © Pilot Publishing Co. Ltd. 2009 Auditing and Assurance in Hong Kong 5 1. Financial Reporting vs. Auditing HKSA 600 has a more-wider definition on a group as follows: A group in the context of HKSA 600: Is defined to be all the components whose financial information is included in the group financial statements; and Always has more than one component. A component is defined to be: An entity or business activity for which group or component management prepares financial information that should be included in the group financial statements. Group financial statements in the context of HKSA 600: Are defined to be financial statements that include the financial information of more than one component; and Also refer to combined financial statements aggregating the financial information prepared by components that have no parent but are under common control.
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© Peter T. Y. Lau and Nelson C. Y. Lam
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Group fs_ AA_Chapter_36 - Chapter 36 Audit of Group...

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