What type of audit involves the examination of group financial statements?

A group audit involves the examination of financial statements of multiple entities that are consolidated into a single group financial statement. This type of audit is necessary when an organization operates through subsidiaries or other entities, and it ensures that the financial information from those various components is accurately integrated and presented in accordance with the applicable financial reporting framework.

In a group audit, the auditor evaluates not only the financial statements of the parent entity but also the financial statements of its subsidiaries and associates. The auditor must assess the risk associated with each component, determine the appropriate audit approach for each, and consolidate findings to provide an opinion on the group financial statements as a whole.

This process is critical because the complexities involved in group structures can lead to variations in accounting policies and practices, which necessitates a thorough and comprehensive evaluation to ensure the integrity and reliability of the overall financial reporting.