Auditing and Assurance

Running head: AUDITING AND ASSURANCE
Auditing and Assurance
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Author’s Note

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AUDITING AND ASSURANCE
Executive Summary
The main purpose of the assessment is to analyse the key audit matters of a banking sector and
how the same are reported in the financial statements of the business. The assessment would be
analysing the Lehman Brother case and how the same helped the AUASB for making
appropriate changes in the structure of audit. In addition to this, the discussion would include
banking businesses and identify the key audit matters which are included by the same.

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AUDITING AND ASSURANCE
Table of Contents
Introduction......................................................................................................................................3
ASA 701: Rationale.........................................................................................................................4
Improvement in the Principle of Going Concern............................................................................5
ASA 701: Discussion.......................................................................................................................6
Key Audit Matters (KAM) of Australian Banking Industry...........................................................6
ANZ Bank....................................................................................................................................7
Westpac Banking Corporation.....................................................................................................8
NAB Bank...................................................................................................................................9
Bank of Queensland limited........................................................................................................9
Common Wealth Bank of Australia..........................................................................................10
Conclusion and Recommendation.................................................................................................11
Reference.......................................................................................................................................12

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AUDITING AND ASSURANCE
Introduction
The role of audit in a business is considered to be very important as the same identifies
material misstatement in the financial records and also provides assurances to the shareholders
that the financial statements which is prepared by the management of the company are showing
true and fair view. It is on the basis of the audited financial statements that investors decide
whether or not to make investments in the company. In other words, the users of the financial
statement are depended on the audit opinion and thereby assumes that the same discloses every
material fact regarding the business (Ghafran and O'Sullivan 2013). The integrity of the process
of audit has declined over the years due to ineffectiveness of audit process to identify material
risks and therefore leading to corporate scandal or downfall of the business. This resulted in a
common demand for appropriate regulation in auditing field so that the users of the financial
statements can rely on the opinion of the auditor.
The quality of audit depends on appropriate audit procedures being conducted and along
with the same proper disclosures regarding the accounting treatments related to the same.
Amendments were made in the auditing standards of ASA 701 Communicating Key Audit
Matters in the Independent Auditor’s Report (ASA 701) for improving the quality of the audit
process. The standard ASA 701 was brought about in replacement of ASA 570 Going Concern
and numerous other standards (Simnett and Huggins 2014). The report would be considering the
Key audit matters which needs to be included in the financial statements of a business as per the
requirement of ASA701. The report would be considering banking sector businesses and the key
aspects which are reported by such businesses.
ASA 701: Rationale