red in determining KAM and discuss what should be included in the description of a KAM.
ISA 701 Communicating Key Audit Matters (KAM) in the Independent Auditor’s Report states the following,
“The purpose of communicating key audit matters is to enhance the communicative value of the auditor’s report
by providing greater transparency about the audit that was performed.”
Required:
a) Describe the factors that should be considered in determining KAM and discuss what should be included in the description of a KAM.
b) Consider each situation below independently and describe the interactions between them and descriptions of KAM in the Auditor’s Report
i. The relevant matter requires the Auditor to modify the opinion in accordance with ISA 705 (Revised) Modifications to the Opinion of the Independent Auditor’s Report.
ii. The auditor has expressed an Adverse Opinion on the financial statements.
iii. The auditor has expressed a Disclaimer Opinion on the financial statements.
iv. A Material Uncertainty Related to Going Concern Exists.
v. The relevant matter should be highlighted/emphasised.
vi. The auditor of this listed entity is unable to determine at least one KAM.
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