Audit and Assurance

Running head: AUDIT AND ASSURANCE
Audit and Assurance
Name of Student
Name of University
Author’s Note

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AUDIT AND ASSURANCE
Executive Summary
The assessment would be dealing with the provisions which is stated under ASA 701 which
relates to improvement of the reporting framework of the business. The assessment would be
going in details on the rationale behind ASA 701 and why the auditors of a business needs to
comment on key audit matters which are identified from the annual report of the companies
which are selected for this assessment. The companies which are selected are from the mining
sector and appropriately follows all relevant accounting standards while preparing the financial
statements of the business. The assessment also includes discussion regarding the key audit
mattes which are included in the annual reports of the companies which are considered for the
purpose of audit.
Table of Contents

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AUDIT AND ASSURANCE
Introduction......................................................................................................................................3
ASA 701: Rationales.......................................................................................................................3
Going Concern Principles................................................................................................................4
ASA 701: Explanation.....................................................................................................................5
KAMs of the Australian Mining Industry.......................................................................................6
BHP Group Limited.........................................................................................................................6
Downer Edi Limited........................................................................................................................7
Evolution Mining Limited...............................................................................................................7
Newcrest Mining Limited................................................................................................................8
Rio Tinto Limited............................................................................................................................9
Witchaven Coal...............................................................................................................................9
Conclusion and Recommendations................................................................................................10
Reference.......................................................................................................................................12

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AUDIT AND ASSURANCE
Introduction
Auditing is a process of checking and investigating the accounting books of the
organizations. It is done after checking of the inventory of the all the departments of the
company and to inspect that all the documentation of the recording standards (Kumar and
Sharma 2015). The auditor who performs the audit of the company goes through all the financial
statement of the company. In the last decade it is seen that the auditor has to face a large amount
of criticism for the involvement in the collapsing of big corporate house in the market. Against
the criticism which has impacted the auditor and the whole audit profession, some new standards
has been introduced in the form of ASA 701 Communicating Key Audit Matters in the
Independent Auditor’s Report (ASA 701). It replaces the existing guidelines of ASA 570 Going
Concern and many other regulations which deal with the regulations of the auditor while doing
audit. This report provides the discussion on the logical view of the auditing standard of ASA
701 and the related particular of the accounting standard (Peytcheva, Wright and Majoor 2014).
This report also explains the efficiency in Key Audit Matter (KAM) in the auditor’s report in the
mining companies who are listed Australian Stock Exchange (ASX).
ASA 701: Rationales
In the business failure of Lehman Brothers the auditor’s failure is taken into
consideration and it is said that it is one of the major reason for business failure. The
management of Lehman Brothers was involved in the malicious acts. The management of the
company uses Repo rate in falsely matter for the purpose of strengthen their company’s balance
sheet, which amounted to $50 billion. Auditor of the firm has full knowledge of this kind of
fraudulency but the auditor provided the unqualified report which is in favor of the organization