Critically Analyze And Evaluate Key Audit Matters - Auditing and Assurance Report Assessment Answer

Topic: Research, critically analyze and evaluate key audit matters in independent auditor’s report Auditor’s report

The new auditing standard ASA 701 communicating key audit matters in the independent auditor’s report was developed in the wake of the global financial crisis (note: following the demise of Lehman Brothers shortly after it received an unqualified audit report, i.e. no prior warning of its demise). This development is in response to calls from shareholders to know more about the companies they invest in (students would need to explain what happened in Lehman Brothers which would evidently be a key audit matter if such an auditing standard had existed then). Further, investors have also requested earlier warnings of potential issues that may exist with respect to an entity’s ability to continue as a going concern which resulted in the revision of ASA 570 (ISA 570) going concern (to include a going concern uncertainty paragraph. Note: during the global financial crisis there was an increase in emphasis of matter paragraph mainly relating to going concern uncertainty now replaced by a “material uncertainty related to going concern” paragraph).

Required: Students are required to research into the rationale for the new auditing standard ASA 701 and explain clearly what it is. Each student is to select an industry, eg. banking, mining, etc and analyze key audit matters in the independent auditor’s reports of all companies in that industry in ASX top 100 listed companies so as to evaluate the efficiency of reporting key audit matters in the independent auditor’s report (i.e. does key audit matters disclosure provide more information to users).

 The report is to be fully referenced (including the annual reports of companies selected for your assignment) and up to 2,500 words (assignment in excess of 2,500 words will be penalized 10% of the marks). There should be a minimum of 8 academic references.

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