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5. Understanding the Group and its components
5.1 Group structure and financial statements
The Group financial statements will be drawn up in accordance with XXX .
For an overall understanding of the Group and its components, information on the Group’s key management and principal activities that are relevant to your scope of work, refer to the Group’s Annual Report, which can be obtained from http://www.XXX.com. Details of the Group’s accounting policies are also set out in the financial statements included in the Annual Report.
Should you identify significant inconsistencies between this information and the information obtained locally by you, you are to communicate such inconsistencies to us as soon as practicable to enable proper consideration at Group level.
5.2 Significant Risks and Other Audit Areas
Based on discussion with the Company’s management and our experience in prior year audits, we have identified significant accounts and areas of significant risks of material misstatement of the Group financial statements, due to fraud or error.
As part of your risk assessment process, at minimum, you should consider those significant risks and other audit areas identified by us, and perform the additional specific audit procedures outlined in the Group Audit Plan (refer Appendix XXX) to respond to those significant risks and other audit areas which have been identified by us.
Any additional significant risks identified should be communicated to us using the Audit Planning Memorandum in Appendix XXX. Upon completion of audit procedures, all risks that are significant to the audit of the Group, including those listed in Appendix XXX, should be communicated to us, together with details of audit procedures performed and results using the Final Memorandum (refer Appendix XXX).
For significant risks that are material to the Group’s financial statements, once notified in the Audit Planning Memorandum, we will determine together with you the additional audit procedures to be performed. We will also communicate to you those changes in the group audit plan or additional significant risk areas identified, which are relevant to your component, if any.
5.3 Fraud and Error
During planning and when performing audit procedures and evaluating and reporting the results thereof, you should consider the risk of material misstatements in the component’s financial information resulting from fraud or error in accordance with XXX.
Please communicate to us the results of your assessment in the Audit Planning Memorandum (refer Appendix XXX) and reconfirm in the Final Memorandum (Appendix XXX) that no additional risk factors were noted at the completion of your audit procedures. All detected or suspected instances of fraud, regardless of materiality should be communicated directly to us as soon as identified.
6. Audit Strategy and Scope
6.1 Audit Scope
The component auditor engagement team should perform an audit of the component’s financial information in accordance with XXX. The audit should be designed to enable you to form an opinion as to the truth and fairness of the component’s financial statements being examined. You are also requested to perform any additional procedures as indicated in Section 5.2 of these instructions.
Your Audit Clearance Memorandum (Appendix XXX) should contain confirmation that you have complied with the above-mentioned requirements when performing your work.
Please note that the Group’s financial statements will be prepared in accordance with XXX. Details of the Group’s accounting policies are set out in the financial statements included in the Annual Report.
Should you determined that the component deviates from the Accounting Standards for Business Enterprises, please notify us immediately with full details and the likely financial impact on the component’s financial information prepared for Group reporting purposes if it is more than the Group Misstatement Reporting threshold as indicated on Section 6.3 of these instructions.
6.2 Our Involvement in Your Work
We intend to use the work performed by you for the purpose of the audit of the Group financial statements, and therefore plan to be involved in your work.
Our planned involvement in your work will consist primarily of reviewing the information you provide to us. Depending on the significance of the component and the scope and risks associated with the audit, we will also visit the component, conduct meetings with component management, participate in your planning activities and risk assessment procedures, evaluate appropriateness of further audit procedures performed by you in response to identified significant risks of material misstatement of the Group financial statements, perform further audit procedures and/or review your audit documentation of work performed.
We will inform you of our proposed involvement as and when such a need is identified.
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