What does a group audit specifically involve?

A group audit specifically involves auditing the combined financial statements of multiple entities, which is reflected in the correct answer. In a group audit scenario, the auditor is tasked with evaluating the financial results of not just a single parent company but also the various subsidiaries and associated entities that operate under that parent.

The purpose of this approach is to provide a comprehensive view of the financial position and performance of the entire group as a single economic entity. This is particularly important for stakeholders who require an understanding of how all parts of the organization contribute to overall performance. The auditor must assess the consolidation process, ensuring that the financial statements accurately reflect the financial results of the group as a whole, including the elimination of intercompany transactions and balances.

The other options do not adequately capture the scope of a group audit. For instance, auditing only the parent company’s financial statements fails to account for the contributions of its diverse subsidiaries. Likewise, focusing solely on the individual subsidiaries overlooks the need to consolidate and comprehend their interrelations. Lastly, reviewing regulatory compliance across jurisdictions is essential for compliance but does not encompass the financial auditing aspect of a group audit, which primarily focuses on the financial data and consolidation process rather than regulatory checks.