ASA 701: Key Audit Matters in Banking Industry

Running head: ASA 701
ASA 701
Name of the Student
Name of the University
Author Note

1ASA 701
Executive Summary
The ASA 701 talks about the overall role of the auditors in a firm and the manner in which the
organization will be required to deal with the different key matters which may have an impact on
the future of the firm. The ASA 701 focuses on the Key auditing matters which are considered
by the auditors after the analysis of the financial statements. The report outlines the overall
meaning and importance of the Key auditing matters along with the case of four different banks
in the Banking industry in Australia.

2ASA 701
Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................3
Analysis...........................................................................................................................................4
The Commonwealth Bank...............................................................................................................5
Australia and New Zealand Banking Group....................................................................................6
National Australian Bank (NAB)....................................................................................................7
Westpac Bank..................................................................................................................................8
Conclusion.......................................................................................................................................8
References......................................................................................................................................10

3ASA 701
Introduction
Sirois, Bédard and Bera (2018) define the Key Audit matters as the matters which under
the judgement of the key financial officer can be deemed to be a matter of utmost significance.
The key audit matters are usually selected from those set of individual matters which are
identified from the financial statement of the organization and hence, are required to be
communicated to the firm in the right manner. The given report aims to outline the overall
importance of the new standard named as the ASA 701 and how the different companies as
present in the banking sector tend to use it and reflect it in the financial statement of the firm.
Discussion
The key audit matters can be rightfully understood as those matters which the key auditor
deems to be relevant and those matters which can later on turn out to be against the favour of the
firm (Köhler, Ratzinger-Sakel and Theis 2016). The key audit matters are generally outlined by
the analysis of the financial statement of the firm when the review undergoes for a particular
period of time. These audit matters are taken to be of utmost importance because, they may have
an overall impact on the overall performance of the firm. The different aspects of the new
standard can be stated to be as follows:
 The key audit measures are required to be adequately communicated in the books of
accounts of the different companies.
 It becomes considerably important for the firm to ensure that it will be able to understand
the point of view of the auditors and take the decisions in that aspect (Knechel and
Salterio 2016).
 The key auditors will be provided with the responsibility of considering the different
areas of risk, which often require additional assessment. Moreover, it can also be
considered to be relatively important for the firm to ensure that, they are successfully able
to make the management realise the overall importance of the issue outlined.
 The documentations required in relation to the Key Audit matters must be identified
adequately (Johnstone, Rittenberg and Gramling 2019).
 The standard ASA is compulsory to be included in the reports as of 15th December 2016.