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📘 ICAN Advanced Audit & Assurance (AAA) – Chapter 10: Group Audits | Full Breakdown for May 2025 Exam Diet

Welcome to this comprehensive breakdown of Chapter 10 – Group Audits from the Advanced Audit and Assurance (AAA) syllabus of the Institute of Chartered Accountants of Nigeria (ICAN). This video is tailored specifically for students preparing for the ICAN Professional Examination – May 2025 Diet, but is equally valuable to audit trainees, professionals, and accounting students seeking mastery in group audit engagements.

📌 What Are Group Audits?
Group audits refer to the audit of group financial statements, which include the financial information of more than one component (e.g., subsidiaries, divisions, or branches). The group auditor is responsible for forming an opinion on the consolidated financial statements as a whole — even when portions of the audit are carried out by component auditors.

🔍 Core Topics Covered in Chapter 10:
Understanding the Group Structure:

Definition of a group, parent, and component.

Key considerations in group engagements: ownership structure, reporting lines, and control mechanisms.

Responsibilities of the Group Auditor:

Establishing overall audit strategy.

Evaluating component auditors' competence and independence.

Issuing group audit instructions in accordance with ISA 600 (Special Considerations—Audits of Group Financial Statements).

Role of Component Auditors:

Performing audit procedures on individual components.

Reporting findings and significant matters to the group engagement team.

Significant vs. Non-significant Components:

Criteria for classification.

Impact on the extent of audit work required.

Communication Protocols:

Effective communication between the group and component auditors.

Documenting nature, timing, and extent of involvement.

Evaluation of component auditor’s work (especially in high-risk areas).

Audit Documentation & Review:

Group auditor’s responsibility to ensure audit documentation is complete and supports the audit opinion.

Reviewing key working papers of component auditors, particularly in material or high-risk areas.

Consolidation Procedures:

Verification of consolidation adjustments and eliminations.

Testing accuracy and completeness of intercompany balances and transactions.

Going Concern and Subsequent Events:

Assessing post-balance sheet events at the group and component level.

How these affect the group auditor’s opinion.

Audit Reporting in a Group Context:

When and how a modified audit opinion may be required.

Emphasis of matter, other matter paragraphs, and their relevance in group audits.

Common Challenges in Group Audits:

Time zone, cultural, language, and regulatory barriers.

Ensuring sufficient audit evidence where access to component information is restricted.

Responding to fraud risk at the group and component level.

✅ Real-Life Application Example:
Imagine a Nigerian holding company with subsidiaries in Ghana, Kenya, and the UK. Each subsidiary prepares its financial statements under different local regulations. The ICAN-trained group auditor must:

Ensure component auditors follow ISAs.

Understand foreign exchange adjustments during consolidation.

Review local tax disclosures and assess cross-border compliance.

Ultimately, form an audit opinion that reflects true and fair view of the consolidated position.

💡 Why This Chapter Matters for ICAN Students:
Group audits are frequently tested in ICAN AAA exams — especially scenario-based questions requiring understanding of the group auditor’s responsibility and how to address reporting implications. This chapter reinforces key professional values such as audit quality, cross-border collaboration, and regulatory compliance — essential for global audit readiness.

👨‍🎓 Whether you’re studying for your ICAN May 2025 Diet, teaching audit courses, or working in a firm that handles consolidated financial statements, mastering group audits will give you a strategic edge.

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📚 Don’t forget to check out our breakdown of other chapters — including Audit Planning, Risk Assessment, Audit Evidence, and Ethics.

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