How is a group defined in an auditing context?

In the context of auditing, a group is specifically defined as a parent company and all its subsidiaries. This definition highlights the organizational structure where the parent company exercises control or influence over its subsidiaries, creating a consolidated financial reporting framework.

When auditors approach a group audit, they must consider the financial information of the parent company along with that of its subsidiaries to ensure accurate financial statements reflecting the entire economic entity. This allows for a comprehensive assessment of the group’s financial position and performance, ensuring that all relevant risks and controls are evaluated collectively.

The other options, while they may touch on various forms of collaboration or partnerships, do not capture the specific hierarchical relationship and control that defines a group in auditing terms. Instead, they describe broader arrangements that do not necessarily align with the formal definition used in auditing practices.