Aggregation risk in a group audit
Aggregation risk is the probability that the aggregate of uncorrected and undetected misstatements across components exceeds group financial-statement materiality. The group auditor considers this risk when determining component performance materiality and coordinating work across components, rather than treating each component in isolation.
Worked example
Several individually small uncorrected errors in different subsidiaries total 120,000 against group materiality of 100,000; the combined effect may be material.
Common mistake
Do not conclude that the group statements are free from material misstatement merely because each component’s error is individually below group materiality.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | AAA (INT) | Direct | September 2026–June 2027 |