Page 247 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori
6. Consolidation Adjustments: making appropriate consolidation adjustments;
7. Segmental Reporting: where appropriate, identifying reportable segments for segmental reporting;
8. Related Party Identification: identifying related parties and related party transactions for reporting;

(CNO GA.080) Responsibility of The Auditor of The Consolidated Financial Statements
Expressing an opinion: The principal auditor of the consolidated financial statements is responsible for
expressing an opinion (Overall Objective) on whether the consolidated financial statements are prepared, in all
material respects, in accordance with the financial reporting framework under which the parent prepares the
consolidated financial statements in addition to reporting on the additional matters as required under the
Companies Act, 2013 and any other statute to the extent applicable
Section 129(4) - Companies Act, 2013: Section 129(4) of the Companies Act, 2013 requires that the provisions
of the Act applicable to the preparation, adoption and audit of the financial statements of a holding company
shall, mutatis mutandis, apply to the consolidated financial statements.
Auditor's Objectives:
Therefore, the auditor's objectives in an audit of consolidated financial statements are:
1A. Applicable financial reporting framework: to satisfy himself that the consolidated financial statements
have been prepared in accordance with the requirements of the applicable financial reporting framework.
1B. True and Fair View: to enable himself to express an opinion on the true and fair view presented by the
consolidated financial statements.
2A. Section 143(1) Enquiry -: to enquire into the matters as specified in section 143(1) of the Companies Act,
2013; and.
2B. Section 143(3) Reporting -: to report on the matters given in the clauses (a) to (i) of section 143(3) of the
Companies Act, 2013 for other matters under section 143(3)(j) read with rule 11 of the Companies (Audit and
Auditors) Rules, 2014, to comment on the matters specified in sub-rule (a),(b), (c), (d), (e), (f) and (g)1 to the
extent applicable;
3. SAs & GNs:
Standards on Auditing, Statements and Guidance Notes on auditing matters issued by the Institute of Chartered
Accountants of India (ICAI) apply in the same manner to audit of consolidated financial statements as they apply
to audit of standalone financial statements.
It means that the auditors, while conducting the audit of consolidated financial statements are, inter alia,
expected to:
3A. Understanding Systems: Obtain an understanding of the accounting and internal control systems including
IT system like consolidation tool, sufficient to plan the audit and determine the nature, timing and extent of his
audit procedures. Such an understanding would help the auditors to develop an effective audit approach.
3B. Audit Planning: Plan their work to enable them to conduct an effective audit in an efficient and timely
manner;

(CNO GA.100) Audit Considerations (Focus)
The following features of consolidated financial statements have an impact on the related audit procedures:
(Shortcut: COACH)
Consolidation procedures: The consolidated financial statements are prepared on the basis of separate financial
statements of the parent and its components, using the consolidation procedures prescribed by Accounting
Standards under applicable financial reporting framework; and
Other financial information: The consolidated financial statements (including the intermediate consolidated
financial statements prepared internally) are prepared using the separate financial statements of the parent and
its components and also other financial information, which might not be covered by the separate financial
statements of these entities.
Assistance from Other Auditors:

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