Auditing and Assurance in Australia - Commonwealth Bank

Auditing and Assurance in Australia
2019

Commonwealth Bank
Executive Summary
The analysis revolves around the concept of ASA 701 that is newly implemented and based on
the communication of major audit matters in the independent audit report. It came into operation
aftermath global economic crisis. The report is based upon the banking industry and to
conduct the study, Commonwealth bank that is listed on the ASX is selected. The report sheds
light on the main audit matters of Commonwealth bank. The report initiates with the introduction
followed by the explanation of the main audit matter and the explanation.
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Commonwealth Bank
Contents
Introduction.................................................................................................................................................4
Interconnection present between the audit report and ASA 701...............................................................4
The case of the Commonwealth Bank.........................................................................................................5
Matters that have been kept hidden by the auditors in the audit report but should have been reported
as main audit matters..................................................................................................................................6
Recommendations.......................................................................................................................................9
Conclusion.................................................................................................................................................10
References.................................................................................................................................................11
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Commonwealth Bank
Introduction
One of the leading banking companies in Australia with strong market share is Commonwealth
Bank. The organization is a public listed company and ensures strong business in order to
generate revenue by conducting various operations throughout the year. The operations
conducted by the organization make it vulnerable to the statement that can be present in the
financial statements of the organization. Also in accordance with the principles, it is the duty of
an auditor to identify the risks that are associated to the financial statements of the organization
so that the users of the financial statement can be safeguarded from any kind of false or
misleading information present in the account of the company (Lapsley, 2012). It has been
clearly stated in the ASA 701 that an auditor needs to communicate all the auditing matters to the
management of the organization so that they can use their information to prevent themselves
from any kind of risks and further enhance the Goodwill of the company.
Interconnection present between the audit report and ASA 701
In accordance to them as a 701, it has been clearly stated that the main audit matters should be
conveyed by the auditor to the organization by preparation of an independent report which can
further help the organization to govern the business. The main audit matters are the points which
are most important for the decisions of an auditor so that clear the financial statement can be
created. The auditor is not relieved from his liability of performing the audit process even after
giving the declaration on the main audit matters that are affecting the economic position of the
organization (AUASB, 2015). Proper reasons also should be provided by the auditor to ascertain
the fact that the points are main audit matters and hence required by the organization to be
looked after carefully.
Hiding material information from the organization is not good for the business because it can
create problems in auditing procedures (Livne, 2015). Although financial information is used by
the stakeholders in order to determine the position of the firm that takes decisions of investment
that is to be made in the firm. Hence, it is necessary for the auditor to analyze all the points so
that any kind of manipulation in the financial statement can be computed (AUASB, 2015). All
the information and facts that were provided to the auditor are mentioned in the audit report that
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