Assignment || Auditing and Assurance

Running head: AUDITING AND ASSURANCE
Auditing and assurance
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AUDITING AND ASSURANCE1
Executive summary
As the demand for transparency regarding the performance of any entity has been increased in
recent times the entities also undergoing changes in context of the audit report and presentation
of key matters in the annual report. ASA 701 has been established in this direction that will
disclose the key audit matters under the annual report of the organizations. The report will
highlight the comprehensive insight regarding components of the new standard. Annual reports
of different entities from banking industry those are listed under ASX will be analysed for
gaining better insights regarding the manner in which the KAMs are disclosed by the entities.

AUDITING AND ASSURANCE2
Table of Contents
Introduction......................................................................................................................................3
ASA 701 – communicating key audit matter (KAM).....................................................................3
Banking industry..............................................................................................................................4
ANZ bank....................................................................................................................................4
Commonwealth bank...................................................................................................................5
Westpac Banking Corporation.....................................................................................................5
National Australian Bank............................................................................................................6
Auswide Bank Ltd.......................................................................................................................7
Medibank Private Ltd..................................................................................................................7
Conclusion.......................................................................................................................................8
Reference.........................................................................................................................................9

AUDITING AND ASSURANCE3
Introduction
New auditing standard ASA 701 for communicating the KAM under auditor’s report
those are independent is established in wake of global financial crisis. The development was on
account of shareholder’s calls to become informed regarding the entities in which they are
intended to invest their money. In addition, it has also been requested by the investors regarding
signs of potential issues those are likely to exist on account of capability of the organisation
continuing as going concern that led to revision of ASA 570 on going concern (Accaglobal.com,
2020)
ASA 701 – communicating key audit matter (KAM)
AUASB defined KAM under ASA 701 as those matters which are of notable importance
in accordance with the auditor’s personal judgement during the process of auditing the
organization’s financial report for concerned period. KAM are generally selected from those who
are in the management of the governance. The new standard is issued for making the directors of
the entities more attentive regarding the KAM and discussing crucial matters with auditors that
will in turn bring consistency regarding the annual reports. New standard involves number of
features including –
 Determining the manner in which the auditors are required to determine KAM such as
determining matters those need immediate response from auditors. In addition they are
required to take into account the risk areas that require auditor’s attention on urgent basis.
Auditor’s judgment those involves impacts of notable events, judgement from
management are considered as crucial matters those shall be included as part of auditor’s
report (Auasb.gov.au, 2020).
 Obligating communication of KAM in listed entity’s auditor’s report
 Allowing auditors from different entities in making decision in context of including
KAM in auditor’s report.
 It defines the manner in which the auditors are required to depict KAM
 Circumstances under which matters associated with KAM have not been stated by the
management under annual report
 Number of other documentation those associated with KAM must be stated
(Auasb.gov.au, 2020).
Major objective of ASA 701 is to enhance confidence that public has on financial
statement of the organisations as well as in the process of audit. It is done with the intention of
offering the investors with –
 Higher level of transparency in context of auditor’s responsibilities
 Providing insights regarding the crucial audit matters and the manner in which the same
has been dealt by the auditors.
Major purpose behind the above is to provide the users of financial statements with better
disclosures made by the entities which in turn will assist those making decisions in informed
manner. Further the new standard has made to conform the auditing standards to ISA 701
(Auasb.gov.au, 2020).