5011 - Worksheet - Group Audit Instructions

Client Name Completed by Reviewed by 5011-0
Period Ended:
Worksheet - Group audit instructions
Insert responses in the shaded boxes.
Ultimate holding company name
Financial reporting period end
Financial reporting framework IFRS (or specify alternative)

Auditing standards ISA (or specify alternative)
Other firm name
Other firm office(s)
Other firm reference (allocate a numeric reference to each other firm for use in
referencing supporting documents)
Component(s) covered by these

instructions
Acknowledgement(s) of these instructions
required by (date)
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International Engagement Forms - Audits
Copyright© CaseWare International Inc.
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CONTENTS
Introduction
A-1 Group Audit Team Contacts and Communication Process 4
A-2 Timetable of Communications 5
A-3 General Information 6
A-4 International Auditing Standards (ISAs) 7
A-5 Reporting under International Financial Reporting Standards (IFRS) 9
Scope of Work
B-1 Audit Scope 11
B-2 Full Scope Engagements 12
B-3 Limited Scope Engagements 13
B-4 Engagement Letters 14
Reporting
C-1 Acknowledgement of Engagement Instructions 15
C-2 Audit and Assurance Infrastructure Evaluation and Firm’s Profile 16
C-3 Confirmation of Independence and Professional Competence 17
C-4 Pre-approval of Other Services 19
C-5 Audit Planning Memorandum and Audit Strategy Memorandum (ASM) 21
C-6 Reporting Package Identification and Audit Questionnaire 22
C-7 Full Scope Conclusion 23
C-8 Limited Scope Conclusion 24
C-9 Audit Completion Memorandum (ACM) 25
C-10 Internal Control Attestation Reporting 26
C-11 Fraud Assessment Report 27
C-12 Summary of Identified Misstatements 28
C-13 Summary of Identified Misstatements Format 29
C-14 Summary of Reclassification Adjustments not Processed 30
C-15 Subsequent Events Review 31
C-16 Management Letter 35
C-17 Representation Letters 36
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CONTENTS
Schedules
D-1 Related Parties 37
D-2 Internal Controls and the Risks of Fraud 38
D-3 Component and Audit Contacts 39
Other forms
Form 5012 Worksheet - Group audit questionnaire
Form 5013 Worksheet - Group audit questionnaire - Subsequent events
Form 5014 'Worksheet - Component auditors - Firm summary profile
Form 5015 Worksheet - Other auditors - Firm infrastructure evaluation
Form 5016 Worksheet - Other auditors - Firm audit methodology evaluation
Form 5017 Worksheet - Other auditors - Firm independence confirmation
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INTRODUCTION
A-1 Group Audit Team Contacts and Communication Process
Group auditor
Mailing address
Physical address
Telephone - switchboard
Fax - general
Primary Contacts:
Direct
telephone Direct fax
(office, mobile, (office, mobile,
Name Role E-mail address residential) residential)
Partner
Senior Manager
Co-ordinator
Other - specify
role
Communication Protocol
Open lines of communication between the Group auditors and the component audit teams are essential to the effective
execution of the audit. Therefore, in addition to the communications required in these instructions, the following general
protocols apply:
 Issues are communicated on a timely basis and not limited to the formal reporting process and dates;
 All reporting deadlines have to be met. Any potential delays will need to be communicated to the Group auditors
and the local team immediately; and to the component’s management; and.
 All review procedures are to be conducted in accordance with ISA 220.
To increase effectiveness, please contact/send all communications to (specify primary point of contact - usually co-
ordinator specified above).
In order to efficiently co-ordinate the large volume of audit-related documents, we request that you consider the following
when forwarding information:
 When faxing documents please ensure that the page sequence is clearly understandable;
 All requested information and reports should be forwarded in English; and
 Electronic communication is preferable.
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A-2 Timetable of Communications

Deadline for
Reporting Requirement Reference Full Scope Limited Scope Receipt
Acknowledgement of Receipt C-1
Audit and Assurance Infrastructure evaluation C-2
Confirmation of Independence C-3
Pre- approval of Other services C-4
Audit Planning Memorandum C-5
Reporting Package Identification C-6
Full Scope Conclusion & Representation Letter C-7 N/A
Limited Scope Conclusion & Representation C-8 N/A

Letter
Audit Completion Memorandum C-9
Internal control Attestation Reporting C-10
Fraud Assessment Report C-11
Summary of Identified Misstatements C-12
Summary of Identified Misstatements Format C-13
Summary of Reclassification Adjustment not C-14

Processed
Subsequent Events Review C-15
Management Letter C-16
Deadline for
Reporting Requirement Reference Full Scope Limited Scope Receipt
Worksheet - Group audit questionnaire Form 5012

Worksheet - Group audit questionnaire -
Subsequent events Form 5013
Worksheet - Component auditors - Firm
summary profile Form 5014
infrastructure evaluation Form 5015
methodology evaluation Form 5016
Worksheet - Firm independence confirmation Form 5017
Please immediately advise (specify primary point of contact - usually co-ordinator specified above) if you anticipate
that you will not be able to meet one or more of the requested reporting deadlines.
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A-3 General Information

We have been engaged to perform an audit of the consolidated financial statements of (specify ultimate holding
company name) (“the Company”) and subsidiaries (together referred to as “the Group”) as of (specify statement of
financial position date) and for the (year/period) then ended. The Company prepares its financial statements in (specify
reporting currency) and in accordance with International Financial Reporting Standards (“IFRS”) (or specify appropriate
financial reporting framework).
These instructions are designed to inform you of the scope of work we require you to perform for the purpose of the Group
audit. The instructions outline, among other areas, the key reporting deadlines and audit deliverables to be submitted to
(specify firm name) (“the Group Auditors”).
(Specify ultimate holding company name), the ultimate holding company of this group, is incorporated in (specify
country of incorporation/registration) is listed on the (specify market(s) if relevant) and is required to produce
consolidated financial statements that comply with (specify relevant legislation and regulations governing the financial
statements).
The scope of work, for the particular component for which you are responsible, that we request you to perform is described
in Section B-1, the reporting timetable is contained in Section A-2 and templates for the reporting deliverables are included
in Section C of these instructions. For the purposes of the group audit relevant professional standards do/do not* [delete as
applicable] permit the use of direct assistance by personnel from any component internal audit function. Provide details of
any intended use of such direct assistance in the conduct of this engagement.
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A-4 International Standards on Auditing (ISAs)
We are required to perform our audit of the Group consolidated financial statements in accordance with International
Standards of Auditing (“ISAs”) (or specify alternative auditing standards). The Group auditors have completed a detailed
review of the ISAs and have identified specific issues in connection with these ISAs to draw to your attention. It is the
responsibility of the component audit teams to determine if additional work is required in order to approve the component
statutory financial statements.
(Specify additional ISAs where they have particular relevance to the engagement.)
ISA 315 – Identifying and Assessing the Risks of Material Misstatement Through Understanding the Entity and Its
Environment
Entity Level Controls

 Evaluating the design of entity level controls
 Obtain audit evidence that entity level controls have been properly designed and implemented
 Audit procedures must include a combination of inquiry, observation of the application of the control and inspection
of documents and reports
Significant Risks
Once a risk is considered significant the following must be performed:
 Relate the risk of misstatement to potential errors at the financial statement assertion level
 Identify, understand and evaluate controls over significant risks
 Design substantive procedures that are responsive to the identified significant risk
ACTION REQUIRED BY COMPONENT AUDITORS

 Document industry, regulatory or other external factors pertinent to the component
 Document all business processes and identify key controls relied upon by management; carry out walk through
tests.
ISA 240 – The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements
The auditor is required to assess the risk of fraud. This includes both the intentional misstatement in financial reporting from,
for example, the intentional omission of amounts or disclosures in financial statements and misstatements from the
misappropriation of assets.
The risk of fraud should be discussed with management and this meeting should be documented. The engagement team
should also meet to discuss the susceptibility of the component’s financial statements to material misstatement due to fraud
and this meeting also needs to be documented.
Journal entries have been specifically identified as a risk and the auditor is specifically required to:
 Understand and document the different journal processes and controls at Group head office and each of the
businesses
 Perform additional substantive testing of journals entries posted throughout the year.

 Complete fraud audit programme.
 Prepare minutes of meetings with the client and audit team to document fraud discussions that have taken place.
 Confirm that appropriate work on journals entries has been completed.
 Review supporting documents for all year end material journals entries.
ISA 330 - The Auditor’s Responses to Assessed Risks

ISAs require that when an audit strategy is chosen that deems that the control is effective but is not tested as it will not be
relied upon (i.e. “moderate” control risk), “limited” tests of controls must be performed and when an audit strategy deems
that the control is effective and it is tested and relied upon (“minimum” control risk), full tests of such controls must be
performed. A limited test of control determines that a control operated effectively at various points in time during the year,
whereas a full test of controls determines that a control operated effectively throughout the period.
 Component auditors are required to take this into consideration with planning the nature, extent and timing of audit
procedures
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ISQC 1 – Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance
and Related Services Engagements
Firms are required to establish systems of quality control designed to provide it with reasonable assurance that the firm and
its personnel comply with professional standards and regulatory and legal requirements. The firm’s system of quality control
should include policies and procedures addressing each of the following elements:
 Leadership responsibilities for quality within the firm
 Ethical requirements
 Acceptance and continuance of client relationships and specific engagements
 Human resources
 Engagement performance
 Monitoring
ACTION REQUIRED BY LOCAL AUDITORS

 Complete Audit and Assurance infrastructure evaluation if required. See C-2
 Complete firm profile checklist. See C-2
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A-5 Reporting under International Financial Reporting Standards (IFRS)

As noted above the Company prepares its financial statements in accordance with International Financial Reporting
Standards (IFRS) (or specify appropriate financial reporting framework).
The instructions issued by the Company itself in the Group Reporting Package (“GRP”) will describe the accounting policies
to be applied by your location for the purpose of preparing its reporting package. We will communicate any actions required
if the GRP does not agree with IFRS. Where the GRP provides insufficient guidance, IFRS must be followed, and
accordingly, your audit conclusion is based on IFRS in accordance with ISA [or specify alternative applicable frameworks]. The
component engagement teams however should be aware of the following:
Significant accounting policies and their implications are:
Examples are:
IAS 37 Provisions, Contingent Liabilities and Contingent Assets

This standard sets out the principles of accounting for provisions, contingent liabilities and contingent assets. Provisions
should only be recognised at the period end when a component has a present obligation (legal or constructive) as a result
of a past event, it is probable that a transfer of economic benefits will be required to settle the obligation, and a reliable
estimate can be made of the amount of the obligation.
IAS 36 Impairment of Assets

Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment and
whenever events or changes in circumstance indicate that the carrying amount may not be recoverable. Assets that are
subject to amortisation are tested for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount
exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in
use. For the purposes of evaluating impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows (cash-generating units).
The component engagement teams should be satisfied that assets are not valued at an amount in excess of their
recoverable amount (the higher of net realisable value and value in use). If auditors believe there is a doubt about the
recoverable amount of an asset being in excess of the carrying value of an asset (material items only) then the issue should
be raised with component management and reported to us.
IAS 19 Employee Benefits

Under IAS 19, the group is required to include additional information in respect of all pension schemes (local and foreign) as
a note to the financial statements. Actuaries have been requested to provide all relevant information in respect of local
schemes direct to the head office with copies to the component management.
We require component audit teams to ensure that all pension schemes and other forms of retirement benefit have been
included by local management in reporting to head office. Auditors should also ensure that information provided by
actuaries is consistent with information included in the group reporting pack and that underlying assumptions made by
actuaries are not unreasonable.
It should be noted that the pension charge recorded through the group’s profit and loss account should represent the
normal annual charge and therefore any exceptional pension payments should be highlighted in your report. The liability (or
asset) recognised in the statement of financial position in respect of defined benefit plans is the present value of the defined
benefit obligation at the statement of financial position date less the fair value of plan assets. Unfunded obligations to pay
terminal gratuities to employees should also be provided for.
IAS 12 Deferred Tax

All components are required to account for deferred taxation on a full provision basis for any differences between
accounting income and taxable income, regardless of the future intentions of the component.
As a general rule, deferred tax:

(a) should be recognised in respect of all timing differences that have originated but not reversed by the statement of
financial position date;
(b) should not be recognised on differences where, given the situation at the statement of financial position date, there is
no likelihood that any tax charge will arise; and should not be recognised on permanent differences.
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A-5 Reporting under International Financial Reporting Standards (IFRS)

A deferred tax asset should be recognised in respect of tax losses to the extent that it is probable there will be suitable
taxable profits from which the future reversal of the tax loss can be deducted. If resulting deferred tax assets have not been
recognised because they are deemed not recoverable, the amount and reason for non-recognition must be disclosed in the
financial statements and a note included in the audit completion memorandum.
It should be specifically noted that deferred tax should be provided in respect of re-valued assets and valuations of
biological assets.
IAS 39 Financial Instruments

Recognition and Measurement
There is a requirement under IFRS to recognise many financial instruments at fair value. Auditors need to be aware of and
highlight, if relevant, the following:
(1) Debtors, recoverable after one year.
(2) Fixed rate loan instruments.
(3) Financial instruments obtained specifically for hedging purposes.
(4) Embedded derivatives.
IFRS 7 Financial Instruments

Disclosure
This standard requires the group to provide disclosures which enable users to evaluate:
a. the significance of financial instruments for the group’s financial position and performance; and
b. the nature and extent of risks arising from financial instruments to which the group is exposed during the period and at
the reporting date, and how the group manages those risks. This requires qualitative and quantitative information including
minimum disclosures about credit risk, liquidity risk and market risk.
The component audit teams need to be satisfied that the minimum requirements of IFRS 7 have been complied with
particularly in respect of the following:
Credit risk - disclosure by class of financial instrument the amount that represents the maximum exposure to credit risk
at the reporting date.
Liquidity risk - maturity analysis for financial liabilities that shows the recurring contractual maturities and a description of
how the liquidity risk is managed.
Market risk - a sensitivity analysis for each type of market risk to which the component is exposed at the reporting date,
showing how the profit and loss and equity would have been affected by changes in the risk variable e.g. interest rates and
exchange rates.
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SCOPE OF WORK
B-1 Audit Scope
The Group audit plan has been developed using a risk-based approach. The Group auditors have defined scope levels and
any additional procedures required for Group Audit purposes as follows:
Full Scope Engagement - refer to Section B-2

For group reporting purposes component planning materiality has been set at not greater than (specify currency and
planning materiality value) and performance materiality has been set at not greater than (specify currency and
performance materiality value).
Component engagement teams should provide a schedule of any waived adjustments greater than (specify currency and
value), or a statement that there were none. This amount is used to accumulate and communicate recorded and
unrecorded misstatements to local management and the Primary Team. This amount is not to be applied in establishing
testing thresholds/ scopes.
Limited Scope Engagement - refer to Section B-3

Thresholds for variance analysis have been assigned for all Limited Scope locations.
In addition to the assigned scope for Group Audit purposes, you may also be engaged to issue, at a local level, an audit
opinion on the statutory financial statements for the component for which you are responsible. Care should be taken to
understand the difference between what is required locally and what is required for Group Audit purposes, and to ensure
any reconciling items between the two sets of financial information is clearly understood.
Performance
materiality for group
reporting purposes
(full scope) or
Threshold for Amount below
Name(s) of variance analysis which
component(s) (limited scope) misstatements
covered by these Principal country(s) Scope of the (not less than the would be clearly
instructions of operation engagement stated value) trivial
If performance materiality should differ between financial statement captions at the component then provide additional
detailed instructions.
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B-2 Full Scope Engagements

To ensure that International Standards on Auditing (“ISA’s”) are being complied with we provide you with audit
questionnaires (see index and submission timetable), which should be completed and your procedures should include, but
not be restricted to, the following:
 Examination of the accounting systems of the subsidiary, or group of subsidiaries, giving rise to accounting
information/an evaluation of internal controls.
 Walkthrough of all accounting systems and related key controls, substantive tests to quantify the degree of
monetary error likely to be caused by a weakness or breakdown.
 An estimate of materiality should be made in order to assist in planning the scope and extent of audit tests and to
evaluate the importance of any errors discovered. This should be used to derive performance materiality, which for
group reporting purposes should not be set at a value less than that specified in section B-1 of these instructions.
 Consideration as to whether the going concern concept continues to be applicable.
 Independent verification of bank balances, property, plant and equipment and investments.
 Tests to confirm cut-off, particularly of income or creditors.
 Generating an Audit Completion Memorandum.
Please see C-7 for the Full Scope Auditor’s Conclusion (C-8 for the Limited Scope Conclusion) and B-1 for components that
you act for that have been designated for Full Scope audit and Limited Scope procedures.
If there are any problems in meeting these requirements, please inform (specify contact point) as soon as possible.
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B-3 Limited Scope Engagements

Guidance notes: A limited scope engagement will need the scope agreed between the group and component auditors and
the client. A likely scenario is that the component auditor is not required to carry out a full scope statutory audit.
The following details an example scoping for a review engagement.
For those entities with a limited scope, a review of the GRP is to be performed in accordance with the instructions below. A
limited review consists primarily of analytical review procedures and discussions with local operating and financial
personnel. Please see C-8 for the Limited Scope Auditor’s Report and B-1 for companies that have been designated for
Limited Scope reviews.(add s)Your review procedures should include, but not be limited to the following:
 Inquiries concerning the component’s procedures for reporting, classifying, and summarising transactions, and
accumulating information for disclosure in the GRP;
 Analytical procedures designed to identify relationships and individual items that appear to be unusual. Analytical
procedures should include; (1) comparison of the GRP with reports for comparable prior period(s); (2) comparison of
the GRP with anticipated results, if available (for example budgets and forecasts); and (3) study of the relationships of
the elements of the GRP that would be expected to conform to a predictable pattern based on the component’s
experience;
 Understanding significant fluctuations in statement of financial position and income statement items and composition of
these accounts;
 Review of the minutes and inquiries concerning actions taken at meetings of shareholders, board of directors,
committees of the board of directors, or comparable meetings that may affect the financial statements;
 Inquiries of persons having responsibility for financial and accounting matters concerning; (1) whether the financial
statements have been prepared in conformity with IFRS [or other framework – specify]; (2) changes in the component’s
business activities or accounting principles and practices: (3) matters as to which questions have arisen in the course
of applying the foregoing procedures; and (4) subsequent events that would have a material effect on the GRP; and
 Generating an Audit Completion Memorandum.
Limited Scope Engagements include limited scope audits (full audit procedures are applied to particular elements of the
Reporting Package), review engagements in accordance with ISRE or national equivalent, other assurance engagements in
accordance with ISAE or national equivalent, related services engagements in accordance with ISRS or national equivalent
and the application of analytical procedures. The Full Scope Conclusion (C-7) and Limited Scope Conclusion (C-8) are
relevant where audit procedures have been applied. If a lesser degree of assurance is to be provided then the Conclusion
will have to be designed according to the particular circumstances of the engagement.
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B-4 Engagement Letters

We have obtained an engagement letter from the holding company that covers the companies audited by the Group Audit
Team. Component audit teams will need to obtain engagement letters with the component(s), where deemed necessary by
statutory regulations or by local office policy.
(Consider requesting a copy of the relevant engagement letters - especially if access to other auditor’s working papers is in
question and requires clearance from the management of the component).
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REPORTING
C-1 Acknowledgement of Engagement Instructions
I acknowledge receipt of these Instructions and related Appendices for the Group Audit work to be performed on the
component(s) listed below for which I am responsible.
Name(s) of component(s) covered by this acknowledgement
Key members of component engagement team

Direct telephone
Role Name (office, mobile, residential) E-mail address
Engagement Partner
Other Relevant Partner(s)
(Senior) engagement
manager(s)
Tax services partner
Other key personnel (specify

role)
Confirmations
Partner initials
I acknowledge that I have read the Group Audit Instructions.
I confirm that I am the partner responsible for the work to be performed in relation to the
component(s) listed above.
I confirm that I understand the Group audit scope for the component(s) for which I am
responsible and that we have the necessary knowledge and expertise to comply with these
Instructions.
I confirm that I have read the Due Dates set out in the Section A-2 and that I do not expect
any problems in complying with your reporting deadlines, requirements, and communication
protocols.
I confirm that in addition to the procedures required for Group Audit purposes, I will be
providing local statutory audit opinions on the financial statements of the following
component(s):
I confirm that the engagement plan for the component(s) does not* [delete as applicable]
include procedures carried out with the direct assistance of any group internal audit function.
(If direct assistance is planned to be used then provide details)
Partner’s Signature: Date:

Partner’s Name: Office:
To be returned to the group auditors for the attention of (specify individual) by (specify date).
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C-2 Audit and Assurance Infrastructure Evaluation and Firm’s Profile

To be customized by the group Auditor – include Area 1 or Area 2.
These forms are required to be completed by each component engagement team.
Form XXX
Form XXX
Form XXX
or
Copies of previously completed forms are held by us and we therefore request that you complete the statement below to
indicate that there have been no major changes to your firm’s infrastructure.
Name(s) of Component(s):
Year End:
I confirm that there are no changes to our audit approach in respect of the component(s) set out above or our firm’s
infrastructure in (specify period).
Audit Partner’s Signature: Audit Partner’s

Name:
Date: Office:
Name(s) of Component(s):
Period end:
To: (Group Audit Partner)
I confirm that there are no changes to our audit approach in respect of the component(s) set out above or our firm’s profile
and audit and assurance infrastructure in (specify most recent submission).
Audit Partner’s Signature: Name:

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C-3 Confirmation of Independence and Professional Competence

(Consider seeking individual independence statements from the component engagement firm and key personnel with the
general confirmation below covering other members of the component engagement team).
(Consider extending enquiries to firms within the same “network” (note 5) as the Other Firm, rather than restricting this to a
single Country Practice).
This form is required to be completed by each component audit team involved in the audit of (specify name of
component(s)). Please send the completed form to (specify contact individual).
As the audit partner you are responsible for supervising compliance with the independence rules by all professionals (audit
and non-audit) in your practice who are involved in providing services to (specify name of ultimate holding company) or
any of its subsidiaries.
In order to manage independence for Group purposes we require that you provide a representation with respect to your
independence in accordance with the section. Auditor independence includes both having no financial interests in (specify
name of component(s)) as well as the scope of services provided.
Confirmation
All members of our country/location component engagement team including specialists such as IT, Tax, etc. experts,
temporary staff, and sub-contractors as well as persons in a position to influence the outcome of the audit have confirmed
to me that (see Note 1 below):
 They have no financial interests in the component(s) (or its ultimate holding company or subsidiary or other
related proscribed entities). I also confirm that I have no such interests.
 They are not, and have not at any time since (specify commencement of the financial reporting period), been
a director of the component or of any member of its group. I also confirm that I have no such involvement.
 None of their immediate or close family member is an employee of (specify name of component(s)) in a position
to exercise influence on the accounting records/financial statements.
In addition, based on my inquiries:
 I confirm that no entity within the country practice, or any separate entity that is not independent of the country
practice (see Note 2 below), has provided any non-audit services that are prohibited under (specify relevant
ethical standards applying to the engagement) on the provision of non-audit services by its auditors (see Note
3 below).
 All audit and non-audit services have been reported through me to the lead Audit Engagement Partner for approval
and record keeping as required by (specify relevant ethical standards applying to the engagement).
 I also confirm that my country practice does not have any business relationships or other arrangements of common
commercial interest with the audit client or its directors/officers/senior client management (see Note 4 below).
Our quality control procedures are conducted in accordance with International Standards on Auditing (or specify relevant
standards) and are in conformity with the ethical guidelines issued by (specify relevant regulatory body). Furthermore all
individuals involved in this engagement, including experts, sub-contractors and temporary staff, are considered to be
suitable for their role, including necessary honesty, integrity, reputation, competence and capability.

Notes to ethical and independence confirmations

1. Immediate and close family relationships
The requirement for independence applies to immediate family members of all relevant individuals.
Where an individual is aware that a close family member has a financial interest or other relationship with the
client (e.g. employment by the audit client in a position to exercise influence on the accounting records or
financial statements) this should be disclosed.
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Notes to ethical and independence confirmations

Immediate family member includes wives, husbands, spousal equivalents (including same sex relationships) and
financially dependent individuals (e.g., children, step-children and other relatives). Financially dependent
individuals include any person who received more than half of their support for the most recent fiscal year from a
professional and/or his or her spouse (or spousal equivalent).
Close family member includes an individual’s non-dependent parents, step-parents, children, step-children and
siblings. Close non-family relationships that entail frequent or regular social contact should also be considered in
the evaluation of any actual or perceived threat to independence.
2. Independence from a national practice
To be independent of the national practice, a separate entity must:
 Be separately owned (giving consideration to ownership by the national practice and partners or
employees of the national practice, including spouses or dependents thereof);
 Have its own separate management;
 Be financially independent of the national practice and partners or employees, including spouses or
dependents thereof, of the national practice;
 Be located in office space separate from the national practice;
 Employ its own separate staff.
3. Conflicting services
Codes of ethics commonly prohibit or restrict the offering of non-assurance services to assurance clients. Each
service must be considered on a case by case basis to evaluate the perceived threats to independence and,
where threats may be safeguarded to reduce the perceived threat to an acceptable level, the nature of potential
safeguards.
Non-assurance services posing threats commonly include:
 Acting in an executive role, such as the initiation of transactions or the exercise of judgement properly
that of management
 Participating in self-interest / joint ventures / go to market activities with the entity or management
 Contingent fees for assurance, tax or transaction advisory services
 Recruitment and certain personnel services in respect of management and other employees with a
significant financial role
 Litigation support and expert services if potential outcome may be material and involves a significant
degree of judgement
 Legal services if the outcome is potentially material to the financial statements and/or involves an
advocacy role
 Bespoke, complex or significant financial systems design and/or implementation
 Accounting services for listed entities or their significant subsidiaries including payroll services, tax
provision work and preparation of statutory financial statements
 Valuation and actuarial services where the valuation would involve both a significant amount of
subjective judgement and potentially have a material effect on the financial statements
4. Business relationships and arrangements of common commercial interest
These could include:

 Joint ventures with the audit client or with senior management of the client- go to market activities that
involve the audit firm and the audit client
 The firm acting as a distributor or marketer of the assurance client’s products or services and vice versa
 Other commercial transactions and arrangements of common interests
 Situations where the client is a key supplier of the firm
 Relationships with the directors/officers or senior client management
5. Network definition
A range of definitions of “network” and “network firm” exist, potentially with different interpretations (especially
concerning branding). Regard should be made to the definition(s) and interpretation(s) or guidance if any
applying in relevant countries. The IFAC Code of Ethics for Professional Accountants contains the following
definition of a network:
“A larger structure: (a) that is aimed at co-operation; and (b) that is clearly aimed at profit or cost sharing or
shares common ownership, control or management, common quality control policies and procedures, common
business strategy, the use of a common brand-name, or a significant part of professional resources.”
__________________________
Period Ended:
C-4 Pre-Approval of Other Services

In order to minimise the risk of conflicting service offering to group companies it is recommended that non- assurance
services are subject to prior approval by group management, with the group auditor being informed of the details. The
following template may be useful in this regard.
Name(s) of assurance
client(s)
Client reference(s)
Location(s)
Reporting currency
Audit engagement partner
Audit engagement manager
This form should be completed for any proposed non-audit services to be carried out by ANY service line for an existing
assurance client. This form serves as the notification to the audit engagement partner on every assurance client. Non-audit
services must not be committed to without prior approval by the audit engagement partner and, where involvement in a
group audit is involved, group management.
Relevant supporting documentation / explanations should be attached if necessary.
Section A
(to be completed by the relevant executive of the service line proposing the non-assurance service)
Nature and description of proposed non-assurance
service
Anticipated fee level for proposed non-assurance
service(indicate if recurring or unique)
Indicate if there are any contingent fee
arrangements proposed and, if so, give details of
their nature
Responsible partner
Approximate proportion of responsible partner’s

current annual fees that fee anticipated would
represent
Responsible manager
Section B
(to be completed by the audit engagement partner)
Confirmations Partner signature Date
I confirm that I have considered the proposed non-
assurance services and I am satisfied that the
proposal can proceed, with the implementation of
necessary safeguards (delete reference to
safeguards where these will not be required).
I confirm that component management and those
charged with governance are aware of the proposal
to provide non-assurance services and proposed
safeguards, where relevant, and have raised no
objection to the proposal.
Where the component is a group company, I confirm
that group management and those charged with
governance are aware of the proposal to provide
non-assurance services and proposed safeguards,
where relevant, and have raised no objection to the
proposal.
__________________________
Period Ended:
Section B
(to be completed by the audit engagement partner)
Confirmations Partner signature Date
I confirm that the non-assurance services are/are
not (delete as appropriate) to be provided.
__________________________
Period Ended:
C-5 Audit Planning Memorandum (APM) and Audit Strategy Memorandum (ASM)
An Audit Strategy Memorandum (ASM) and/or an Audit Planning Memorandum (APM) should be sent to (specify individual)
in accordance with the timetable at Section A-2.
The ASM and/or APM include, as a minimum, the following information:
a) Business Knowledge
 all industry, regulatory or other external factors pertinent to the component;
 consideration of applicable laws and regulations;
b) Control assessment and risk identification
 summary of the audit approach adopted including the steps taken to ensure all business processes and key
controls are identified and verified;
 assessment of significant audit risks and the steps taken to address these risks; and
 details of the planning and performance materialities, their calculation materiality and sample sizes to be used.
c) Planning and Performance Materialities, and the Summary of Identified Misstatements
Nominal calculations and conclusions reached.
d) Fraud Considerations
Summary of procedures performed and information considered to identify the risks of material misstatement due to
fraud.
e) Error considerations
Summary of potential for material misstatement in the financial statements resulting from error and the effect on
audit procedures and other aspects of the audit.
f) Other
Any other significant matters deemed appropriate.
When significant changes have taken place since the prior year, the ASM and/or APM contains a description of significant
changes in the component’s business, markets, and other environmental factors as well as significant changes in internal
controls and any other matters of significance as deemed appropriate.
__________________________
Period Ended:
C-6 Reporting Package Identification and Audit Questionnaire

We request that you provide us a copy of the reporting package subjected to your procedures and signed for identification
purposes (together with the signed financial statements of the component - delete if inappropriate).
Please also confirm that there have been no significant changes to the information provided on the audit questionnaires in
the period to completion of the subsequent events review (see timetable at A-2).(add )
__________________________
Period Ended:
C-7 Full Scope Conclusion

(Guidance note: These instructions are intended to deal with situations where the other auditors are reporting independently
on a group reporting package. A separate statutory audit report may be being issued but it may not be issued prior to the
completion of the group audit. In such a case there is a requirement for a report addressed to (specify name of group
auditors). This example report takes account of receipt of a group reporting package and should be tailored accordingly
depending on what is to be delivered by the component auditors).
Name(s) of Component(s):__________________________
Period end: __________________________
To: Group auditor (specify firm name)
This Full Group Audit Scope Conclusion should be read in conjunction with the Audit Completion Memorandum dated
[date], which describes the results of our audit procedures.
We have performed a Full Scope Engagement on the Group Reporting Package of [component name] (“the component”)
(a [Subsidiary/Branch/Division - delete as applicable] of (specify name of ultimate holding company) comprising
[specify forms covered by this conclusion] expressed in local currency as of (specify period end date) and for the year/period
then ended (the “specified forms”). All information included in the specified forms is the sole responsibility of the
component’s management. These specified forms do not purport to be financial statements and are prepared in accordance
with IFRS (or specify other appropriate financial reporting framework), the Reporting Package Instructions and
(specify firm name) Group Audit Instructions for the sole purpose of consolidation into the consolidated financial
statements of (specify name of ultimate holding company), which are prepared in accordance with International
Financial Reporting Standards (or specify other appropriate financial reporting framework). Our responsibility is to
conclude, for the purpose of inclusion in the consolidation of (specify name of ultimate holding company) and group
companies, on the compliance of the specified forms with IFRS, the Reporting Package Instructions and (specify firm
name) Group Audit Instructions.
We conducted our audit procedures in accordance with International Standards of Auditing (or specify relevant auditing
standards). In accordance with a Full Scope engagement, we planned and performed our audit procedures to obtain
reasonable assurance about whether the specified forms are free of material misstatement. A Full Scope engagement
involves examining, on a test basis, evidence supporting the amounts in the specified forms. It also includes evaluating the
accounting principles used and significant estimates made by management.
In accordance with the Group Audit Instructions dated [date of instructions], the scope of our audit procedures was
established based on our [or other - specify basis] level of materiality, established to obtain reasonable assurance as to
whether the specified forms contain misstatements that exceed [specify currency and amount] in the aggregate [also specify
lesser specific materialities where relevant].
We conclude, based on the specified [or other - specify basis] materiality, that for the sole purpose of inclusion in the
consolidation of (specify name of ultimate holding company) and group companies, the specified forms referred to
above have been prepared in accordance with Reporting Package Instructions and (specify firm name) Group Audit
Instructions.
This conclusion is solely for your information and use in conjunction with the audit of the consolidated financial statements
of (specify name of ultimate holding company) and group companies and should not be used by anyone for any other
purpose. If you have any questions on the contents of the Audit Completion Memorandum or this conclusion please contact
(specify contact individual).
[Date] _________________________
[Signature of Partner] _________________________
[Name of Partner] _________________________
[Name of firm] _________________________
[Location of Office and Country] ______________________
__________________________
Period Ended:
C-8 Limited Scope Conclusion

(Guidance note: These instructions are intended to deal with situations where the other auditors are reporting independently
on a group reporting package. A separate statutory audit report may be being issued but it may not be issued prior to the
completion of the group audit. In such a case there is a requirement for a report addressed to (specify name of group
auditors). This example report takes account of receipt of a group reporting package and should be tailored accordingly
depending on what is to be delivered by the component auditors).
Name(s) of Component:__________________________
Period end: __________________________
To: Group auditor (specify firm name)
This Limited Scope Conclusion should be read in conjunction with the Audit Completion Memorandum dated [date] which
describes the results of our audit procedures.
We have performed a Limited Scope Engagement on the Group Reporting Package of [component name] (“the
component”) (a [Subsidiary/Branch/Division - delete as applicable] of (specify name of ultimate holding company)
comprising [specify forms covered by this conclusion] expressed in local currency as of (specify period end date) and for the
period then ended (the “specified forms”). All information included in the specified forms is the sole responsibility of the
component’s management. These specified forms do not purport to be financial statements and are prepared in accordance
with IFRS (or specify other appropriate financial reporting framework), the Reporting Package Instructions and
(specify firm name) Group Audit Instructions for the sole purpose of consolidation into the consolidated financial
statements of (specify name of ultimate holding company), which are prepared in accordance with International
Financial Reporting Standards (or specify other appropriate financial reporting framework). Our responsibility is to
conclude, for the purpose of inclusion in the consolidation of (specify name of ultimate holding company) and group
companies, on the compliance of the specified forms with the Reporting Package Instructions and (specify firm name)
Group Audit Instructions.
We conducted our procedures in accordance with a Limited Scope Engagement as per the (specify firm name) Group
Audit Instructions. These procedures were limited primarily to inquiries of company personnel and analytical procedures
applied to financial data and thus provide less assurance than a Full Scope Engagement. We have not performed a Full
Scope Engagement and, accordingly, we do not express a Full Scope Engagement Conclusion on the specified forms.
In accordance with the (specify firm name) Group Audit Instructions dated [date of instructions], we established our
analytical procedures to identify unexpected differences or the lack of expected differences greater than (specify currency
and amount).
We conclude that, based on our limited procedures, nothing has come to our attention that causes us to believe that the
specified forms referred to above, prepared for the sole purpose of inclusion in the consolidation of (specify name of
ultimate holding company), have not been prepared in accordance with IFRS (or specify other appropriate financial
reporting framework), the Reporting Package Instructions and (specify firm name) Group Audit Instructions
This conclusion is solely for your information and use in conjunction with the audit of the consolidated financial statements
of (specify name of ultimate holding company) and group companies and should not be used by anyone for any other
purpose. If you have any questions on the contents of the Audit Completion Memorandum or this conclusion please contact
[Date] _________________________
[Signature of Partner] _________________________
[Name of Partner] _________________________
[Name of firm] _________________________
[Location of Office and Country] ______________________
__________________________
Period Ended:
C-9 Audit Completion Memorandum (ACM)

An Audit Completion Memorandum (ACM) is required in respect of the component(s) for which you are responsible that
summarises important audit results and conclusions, highlighting major issues from your audit work is to be provided in
accordance with the timetable at Section A-2. Your ACM should be written in a manner that fully explains the facts of the
issues, amounts involved, and conclusions reached.
The memorandum should include, but are not limited to, the following:
Overview of Financial Results and Financial Position

A brief analytical review of the financial statements to provide explanation of significant changes in profit & loss account and
statement of financial position from figures reported in the previous year’s financial statements and any differences in
quantification or classification of the financial statements when compared with the Reporting Package.
Material Events in Year

1. Major accounting and auditing matters covering disputes, specific representations or other items considered to be
important to the financial statements of the component or group.
2. Where the financial statements include material items which have been valued on a subjective basis, an
explanation of the assumptions that have been used to obtain the amounts and an indication of the range of
potential values if the assumptions were to change, with narrative explanation, should be given.
3. Changes in accounting policies, with the monetary effect on the statement of financial position, profit and loss for
the current and preceding year, and opening retained reserves, together with a narrative description of why the
policy has changed should be given.
4. Unusual transactions, including details of related party transactions, including category of related party, type and
amount of the transactions, and any outstanding balances at year end.
5. Accounting matters involving judgment, with detail of the amounts involved and narrative as to how the amounts
were arrived at (specifically including comments on e.g. the carrying value of goodwill).
6. Limitations in audit scope.
7. Statement of planning and performance materialities and bases calculation.
8. Significant risks identified the audit implication of the risk and the audit work performed to mitigate these risks.
9. Details of significant control weaknesses supported where appropriate by copies of letters to management
highlighting these weaknesses or a confirmation that there were no significant control weaknesses identified.
Fraud and Error

 Component auditors should have considered and documented, at the planning stage, the risk of material
misstatement occurring due to fraud or error. Any significant risk factors or occurrences of fraud identified at the
planning stage or subsequently should be highlighted. The component audit teams should pay particular attention
to risk of fraud considered at group level by the Group auditors (See D-2).
Law and Regulations

 Details of any breaches of any industry specific laws and regulations which will have a financial impact on the
component(s)/sub group or confirmation that there have been no breaches.
Going Concern
 Details of any issues which could affect the going concern status of the component(s).
Subsequent Events
 Details of any events after statement of financial position date to date of signing the audit conclusion. (This may be
covered by the additional subsequent events checklist at C-15 or use of Form 5013).
Related Party Transactions

 Guidance is included in D-1.
The directors of (specify name of ultimate holding company) are included in D-3. Any transactions of which you are
aware with these or other directors or officers of the group companies should be communicated to the Group Auditors
__________________________
Period Ended:
C-10 Internal Control Attestation Reporting

Name(s) of Component:
Period end:
Requirements
We require you to confirm:
a) That you are not aware of any significant internal control weaknesses, or
b) If any such weaknesses exist, that these have been reported directly to local management and to the Group
Auditors.
Definitions
The following definitions should be used:
Internal controls are defined as being:
“The whole system of controls, financial and otherwise, established in order to provide reasonable assurance of:
i. effective and efficient operations;
ii. internal financial control; and
iii. compliance with laws and regulations”.
Internal financial controls are further defined as:
“The internal financial controls are established in order to provide reasonable assurance of:
i. the safeguarding of assets against unauthorized use or disposition; and
ii. the maintenance of proper accounting records and the reliability of information used within the business or for
publication”.
__________________________
Period Ended:
C-11 Fraud Assessment Report

We request that you provide us a report on the assessment of fraud risk for each component upon which you have
concluded (consider specifying the specimen assessment of fraud risk included at E/4 within the MSIL specimen
methodology).
The report should consider the potential fraud risks detailed in D-2 and highlight the local fraud considerations.
__________________________
Period Ended:
C-12 Summary of Identified Misstatements

Misstatements include both errors and judgemental differences. You should report all audit differences to local management
as they arise and encourage management to record all proposed adjustments arising from your procedures.
All identified misstatements over the Significant Amount of (specify currency and value) are to be communicated to the
Group auditors, and will be included in the Group Summary of Identified Misstatements– differences should be reported in
the format shown on C-13. Please explain each identified misstatement adequately as to the nature of the difference
(including a brief discussion of management's position and an explanation of the local audit team’s position) in the Audit
Completion Memorandum and note whether it has been discussed and cleared with local management.
In order for us to appropriately communicate with the Audit Committee we need to be aware of any audit adjustments
reflected by local management within their reported results. Accordingly, processed differences should be communicated in
the format at C-13.
__________________________
Period Ended:
C-13 Summary of Identified Misstatements Format

Name(s) of component(s):
Reporting currency:
Period end:
Statement of
Processed Account Profit and loss Financial Position
Ref Y/N categories Description Dr Cr Dr Cr
Total
All unprocessed items identified on the Identified Misstatements are to be discussed in the ACM.
Identified Misstatements Conclusion:
__________________________
Period Ended:
C-14 Summary of Reclassification Adjustments Not Processed

Reporting currency:
Period end:
Statement of
Account Profit and loss Financial Position
Ref categories Description Dr Cr Dr Cr
Total
Conclusion:
__________________________
Period Ended:
C-15 Subsequent Events Review

(or make use of Form 5013)
You should perform a subsequent events review from the statement of financial position date or date of your report to the
Group Auditors and ACM (specify according to whether reliance is to be placed on the Reporting Package to cover
the period from the statement of financial position date to the audit report date) to (specify date) and report to us
using the format provided below.
Reporting currency:
Period end:
Specific confirmations
1.1 Going concern
Yes/No/NA Comments
Have you confirmed appropriateness of the going concern basis
by review of most recent management accounts, budgets, cash
flow forecasts, correspondence with bankers and other available
data prepared by the component to identify current trends and to
highlight any unusual amounts or accounting ratios?
Have you evaluated the continuing availability of sources of
finance to the component over a period of at least one year from
the (specify statement of financial position date or date of
audit report)?
Are you satisfied that the assumption that the financial statements
should be prepared on a going concern basis is justified?
Special attention should be given to the following:
 Loss of important customers/suppliers.
 Increasing debt to equity ratio.
 Negotiation for and/or continuation of finance facilities.
 Increasing dependence on short term finance.
 Extension of length of credit taken.
 Deferment of purchases.
 Declining stocks and sales.
 Litigation with customers/suppliers.
 Reduced profitability.
 Reductions or cancellations of capital projects.
 Dependence on an affiliated undertaking for finance or
trade.
 Heavy capital investment without the likelihood of
commensurate returns.
 Onerous revenue commitments.
1.2 Property, plant and equipment, intangible assets and investment property
Yes/No/NA Comments
Have you confirmed that the gross proceeds of any property, plant
and equipment, intangibles, investment property and long term
investments sold since the statement of financial position date are
not materially different from the book value at the statement of
financial position date and the date of sale? If there is a material
difference, bring to our attention.
Have you confirmed that there has been no impairment of
property, plant and equipment, intangibles, investment property
and long term investments?
__________________________
Period Ended:
1.3 Inventory
Yes/No/NA Comments
Have you confirmed that no events have occurred after the
statement of financial position date which might have impaired the
amounts at which raw materials, work in progress and finished
goods are included in the statement of financial position?
In particular, have you considered the following trends:
 Reduction in sales price levels?
 Reduction in purchase price levels of raw materials?
 Levels of sales?
 Levels of inventory by main category?
 Discontinued lines?
Have you performed independent checks on the information?
1.4 Current asset investments

Yes/No/NA Comments
Have you confirmed that there has been no material change in the
market value of current asset investments? If so, bring to our
attention.
1.5 Debtors
Yes/No/NA Comments
Have you updated the bad and doubtful debts review in light of
any further information which may be available?
Have you updated the debtors review in light of credit insurance
claims which were in the course of negotiation at the statement of
financial position date?
1.6 Current liabilities

Yes/No/NA Comments
Have you confirmed that management are not aware of any
events which have occurred after the statement of financial
position date which could indicate that the liabilities in the financial
statements are materially under-stated or over-stated?
Have you performed independent checks on the information?
1.7 Taxation
Yes/No/NA Comments
Have you confirmed that nothing has occurred since the
statement of financial position date in respect of taxation which
would require a change to any provision or disclosure made?
1.8 Share capital and other equity

Yes/No/NA Comments
Have you confirmed that there have been no changes in the
capital structure since the statement of financial position date? If
there have been, bring to our attention.
1.9 Long term liabilities

Yes/No/NA Comments
Have you enquired and verified whether the component has
continued to comply with the terms of any loan agreements, trust
deeds or other binding obligations?
__________________________
Period Ended:
1.10Grants and other government assistance

Yes/No/NA Comments
Have you confirmed that no event has occurred which will result in
the repayment of grants beyond any amount already included in
the statement of financial position as a liability?
1.11Contingent liabilities
Yes/No/NA Comments
Have you reviewed contingent liabilities set out in the Reporting
Package/notes to the financial statements to confirm that none of
these should be reclassified as actual liabilities?
Have you confirmed that there are no further contingent liabilities
which should be included in notes to the financial statements?
1.12Currency
Yes/No/NA Comments
If relevant rates of exchange have materially altered since the
statement of financial position date, estimate the effect of the
change and bring to our attention.
1.13Window dressing
Yes/No/NA Comments
Have you identified potential window dressing transactions around
the statement of financial position date? If any identified please
bring to our attention.
Have you reviewed in the light of circumstances arising after the
statement of financial position date whether statement of financial
position figures have been reduced or inflated and consider
whether the substance of a transaction is primarily to alter the
appearance of the statement of financial position? Bring such
transactions to our attention.
1.14General
Yes/No/NA Comments
Have you examined minutes of any meetings of shareholders,
directors and other appropriate committees held since the
previous review of meetings and ensured that all meetings are
supported by available minutes? Bring to our attention any
matters which could affect the component or other group
undertakings.
Have you reviewed the register of charges for any changes after
the statement of financial position date?
Have you confirmed that there have been no material transactions
since the statement of financial position date not in the ordinary
course of business?
Has any information come to your attention since the statement of
financial position date that throws any doubt upon, or contradicts,
information obtained during the audit, including management
representations? Bring to our attention any instances with
implications that are potentially significant to the component.
1.15Non-adjusting events
Yes/No/NA Comments
Have you ensured that all material subsequent events classified
as non-adjusting events have been adequately disclosed in the
notes to the financial statements as to:
a) Nature of event?
b) Estimate of financial effect?
__________________________
Period Ended:
Supplementary information
Give details of subsequent events, both adjusting and non-adjusting, that are regarded as significant to the component.
Where necessary attach supplementary documentation.
Attached
Yes/No/NA Comments
Adjusting events:
Non-adjusting events:
Report
We confirm that we have undertaken a review of events occurring after the statement of financial position date through to
(specify date) and confirm that there are no matters arising for the purposes of your audit except as indicated above*/in the
attached schedules.

__________________________
Period Ended:
C-16 Management Letter
In addition to any weaknesses in controls over business and accounting processes noted and potential efficiencies
identified, recommendations to management will demonstrate our knowledge of the business.
The standard format for recommendations is as follows:

 Observations
 Implications and consequent risk(s)
 Recommendation
 Management response (including person responsible and implementation date)
Please provide us with a copy of all communications with management and those charged with governance concerning
internal control at the component.
__________________________
Period Ended:
C-17 Representation Letters
Below is a list of points that are to be included in the Representation Letter that should be obtained from management in
regard to the GRP. You should add other points that are relevant to the specific local entity. A copy of this representation
letter should be passed onto the Group Auditors Team at the same time as your audit opinion.
 Availability of Information
 Revenue Recognition
 Contingent Liabilities
 Litigation
 Related Party Transactions (including transactions with directors)
 Events After the Statement of Financial Position Date
 Going Concern
 Compliance with Laws and Regulations
 Fraud and Irregularities
 Error
 Summary of Identified Misstatements with management’s conclusion as to their non-material nature
__________________________
Period Ended:
SCHEDULES
D-1 Related Parties
We have provided in the attached schedules details of the related parties of the Group that we have identified. Component
engagement teams should notify the Group Audit Team immediately if they identify issues with the accuracy and
completeness of this list. Component engagement teams should utilise this information when confirming their independence
and for their audit purposes. IAS 24 is the International Accounting Standard covering related party disclosures. IAS 24
contains no measurement rules but requires disclosure of information on material transactions with related parties. No
distinction is made between normal and abnormal transactions as transactions with related parties are considered to be of
interest whether or not they are at arm’s length.
Definition of related party

In all circumstances in connection with your audit the following are to be treated as related parties:
 directors of (specify name of ultimate holding company)
 directors of the component, subsidiaries of the component and other group companies in the country(s) of
residence of the component
 directors of group companies that hold financial participations in group companies
 subsidiary undertakings
 related, associated undertakings and joint ventures
 employee share option plans; and
 pension funds for the benefit of employees of group companies or of any of its related parties, where investment
decisions can be influenced.
In addition, there is a presumption that the following are related parties:

 key management of the component, subsidiaries of the component and other group companies in the country(s) of
residence of the component;
 an entity managing or managed under a management contract by the component or a related party;
 members of close family of any individual (including a director) who is a related party; and
 entities (e.g. companies, partnerships, trusts) controlled by any individual who is related party.
The presumption that these are related parties may be rebutted if the component can demonstrate that it has not
influenced, or been subject to influence from, the other party in such a way that either the component or the other party has
been inhibited from the pursuit of its own separate interests. Note: it would not be enough just to show that the component
has not been disadvantaged.
Definition and Disclosure of Related Party Transactions

A related party transaction is defined as ‘the transfer of assets or liabilities or the performance of services by, to or for a
related party, irrespective of whether price is charged’. This covers all transactions, including those undertaken in the
normal course of business or at arm’s length prices.
If you identify any related party transactions please provide (specify firm name) with the following details:
 the names of the transacting related parties;
 a description of the relationship and of the transactions;
 the amounts involved;
 any other elements of the transactions necessary for an understanding of the financial implications (e.g. fair value
information if not at arm’s length terms);
 any balances outstanding at the statement of financial position date, with comparative information; and
 any amount written off, provided against, due to, or due from related parties during the period.
Please provide on a timely basis details of additional related parties that you have identified during your audit.
__________________________
Period Ended:
D-2 Internal Control and Risks of Fraud

Description of internal controls and risks of fraud at group level
Specific fraud risks identified include the following:
The Group Audit team therefore advises that when considering the possibility of fraud, component audit teams pay
particular attention to other debtors and other creditors, to ensure there are no material unusual transactions.
Items to look for which may indicate fraud are:
 Unreconciled suspense accounts

 Unsupported transactions
 Transactions on unusual terms or not available generally
 Information provided late in the day
 Items not in line with expectations
 Management overrides
 Aggressive application of accounting principles
 Poor segregation of duties
 Unusual cash transactions
Component audit teams should consider their local internal control and fraud considerations.
Component audit teams should include comments regarding their consideration of the risk of fraud and non-compliance with
laws and regulations in the final Audit Completion Memorandums submitted to the Group Auditors. However any significant
issues identified during the planning and fieldwork phase should be communicated to the Group Auditors on a timely basis.
In addition to the consideration of fraud, the component audit team must recognize that non-compliance by the component
with other laws or regulations may materially affect the financial statements. Please inform (specify contact) if you identify
any issue that you believe would be significant to the group.
__________________________
Period Ended:
D-3 Component and Audit Contacts

Group management have advised the Group Auditors of the following details concerning the component and have
provided the attached organisation chart: Please advise us of any identified inaccuracies.
Location details
Component name(s), including trading names
Address of finance function
Other business addresses
Telephone
Fax
Website
Key contact details - name and e-mail address

Chairman
Managing director/Chief operating officer
Finance director
Internal legal counsel
Directors and other officers - name and details of other directorships within and outside the group
Chairman
Non-executive director(s)
Executive director(s)
Finance director
Members of the audit committee
Independent directors
Members of the finance team - name

Financial controller
Treasurer
Head of sales
Head of purchasing
Head of inventory control
__________________________

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Client Name Completed by Reviewed by 5011-0

Insert responses in the shaded boxes.

Ultimate holding company name

Financial reporting period end

Financial reporting framework IFRS (or specify alternative)

Other firm name

Other firm office(s)

Component(s) covered by these

A-1 Group Audit Team Contacts and Communication Process 4

A-2 Timetable of Communications 5

A-3 General Information 6

A-4 International Auditing Standards (ISAs) 7

A-5 Reporting under International Financial Reporting Standards (IFRS) 9

B-1 Audit Scope 11

B-2 Full Scope Engagements 12

B-3 Limited Scope Engagements 13

B-4 Engagement Letters 14

C-1 Acknowledgement of Engagement Instructions 15

C-2 Audit and Assurance Infrastructure Evaluation and Firm’s Profile 16

C-3 Confirmation of Independence and Professional Competence 17

C-4 Pre-approval of Other Services 19

C-5 Audit Planning Memorandum and Audit Strategy Memorandum (ASM) 21

C-6 Reporting Package Identification and Audit Questionnaire 22

C-7 Full Scope Conclusion 23

C-8 Limited Scope Conclusion 24

C-9 Audit Completion Memorandum (ACM) 25

C-10 Internal Control Attestation Reporting 26

C-11 Fraud Assessment Report 27

C-12 Summary of Identified Misstatements 28

C-13 Summary of Identified Misstatements Format 29

C-14 Summary of Reclassification Adjustments not Processed 30

C-15 Subsequent Events Review 31

C-16 Management Letter 35

C-17 Representation Letters 36

D-1 Related Parties 37

D-2 Internal Controls and the Risks of Fraud 38

D-3 Component and Audit Contacts 39

Form 5012 Worksheet - Group audit questionnaire

Form 5013 Worksheet - Group audit questionnaire - Subsequent events

Form 5014 'Worksheet - Component auditors - Firm summary profile

Form 5015 Worksheet - Other auditors - Firm infrastructure evaluation

Form 5016 Worksheet - Other auditors - Firm audit methodology evaluation

Form 5017 Worksheet - Other auditors - Firm independence confirmation

A-2 Timetable of Communications

Audit and Assurance Infrastructure evaluation C-2

Confirmation of Independence C-3

Pre- approval of Other services C-4

Audit Planning Memorandum C-5

Reporting Package Identification C-6

Full Scope Conclusion & Representation Letter C-7 N/A

Limited Scope Conclusion & Representation C-8 N/A

Internal control Attestation Reporting C-10

Fraud Assessment Report C-11

Summary of Identified Misstatements C-12

Summary of Identified Misstatements Format C-13

Summary of Reclassification Adjustment not C-14

Management Letter C-16

Worksheet - Group audit questionnaire Form 5012

Worksheet - Firm independence confirmation Form 5017