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

Marlow Group's auditor sets a threshold above which misstatements identified in components are communicated to the group team, and sets it at an amount that is clearly trivial for group purposes. During the audit, Component Y's auditor finds several errors, each below this threshold. What is the correct group engagement team position?

Items below the clearly trivial threshold need not be reported to the group team, but the threshold must be set low enough that such items would not be material even in aggregate. The group team should still consider qualitative factors and whether the threshold remains suitable.

1. AThe errors can be ignored, because anything below the threshold is immaterial in every circumstance
2. BThe component auditor need not report them, but the group team should still consider whether, if they accumulate across components, they might be material, and whether the threshold is appropriately setCorrect
3. CThe component auditor must adjust the group financial statements directly without telling the group team
4. DThe errors must be reported to those charged with governance of the component only, never to the group team