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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Group audits

During the Duneside Group audit, the group team sets a clearly trivial threshold for accumulating misstatements and communicates it to component auditors. Which statement is correct?

The group team sets a clearly trivial threshold and communicates it to component auditors. Misstatements below that threshold do not need to be accumulated or reported to the group team. The threshold is set well below materiality, not equal to performance materiality, and is not decided independently by component auditors.

  1. AThe threshold is for the component auditor to set independently, and the group team must not communicate it
  2. BMisstatements below the threshold need not be communicated by component auditors to the group teamCorrect
  3. CThe threshold should be set at group performance materiality so fewer items are reported
  4. DComponent auditors should communicate all misstatements regardless of size, with no threshold

Explanation

The group team sets a threshold below which misstatements are clearly trivial and need not be accumulated, and communicates it to component auditors. Misstatements under it need not be reported. It is set well below performance materiality, not at that level, and it is not left to component auditors alone.

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