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Assurance and Materiality in Group and Other Multi-Component Audits
Trevor Stewart,
Deloitte & Touche
ABSTRACT. A framework is presented for solving a class of practical problems related to audit assurance, including [] Determining component materiality and assurance in group and single-entity audits so that overall audit objectives are achieved in an optimal manner; [] Allocating assurance related to families of separately-reporting entities to the individual entities and determining the extent of further assurance required to meet entity audit objectives; [] Accumulating audit assurance from mixtures of statistical and judgmental audit procedures and other sources of evidence; and [] Aggregating audit assurance across components to establish overall conclusions. There is little guidance in the literature for this, and the absence of a generally accepted theoretical framework means that auditors are prone to making unnecessarily different judgments under similar circumstances. The framework presented here has been implemented in software and piloted on several engagements.
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