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(PDF) Auditing and assurance : Some emerging issues

   

Added on  2021-01-02

12 Pages3616 Words169 Views
AUDITING ANDASSURANCE

EXECUTIVE SUMMARYAuditing standard 701 regading communicating Key Audit Matters in the independentauditor’s report is presented to correlate the global financial crisis. The case of Bankruptcy ofLehman Brothers critically analysed and auditors role evaluated with in depth analysis. ASAgives additional infomraton to the users that is the reason its is most recommended standard todeal with circumstenses like globalisation and finance risk.

Table of ContentsEXECUTIVE SUMMARY.............................................................................................................2INTRODUCTION...........................................................................................................................1MAIN BODY...................................................................................................................................1Explanation and Rationale for the new auditing standard ASA 701..........................................1Key Audit Matters in Australian Banking Industry....................................................................4RECOMMENDATIONS.................................................................................................................8CONCLUSION................................................................................................................................8REFERENCES................................................................................................................................9

INTRODUCTION'Auditing' relates to the independent examination of financial accounts of a businessentity with an objective to review the performance of the enterprise on the basis of collectibleevidence and its evaluation thereof (Castelo Branco and et.al., 2014). This process of obtainingevidence by the auditors for the purpose assessing the degree of authenticity present in thefinancial statements of the organisation is known as 'Assurance'. Hence, Auditing and Assuranceare complementary concepts. For this purpose, many standards have been formulated bydifferent regulatory bodies operative worldwide. This report aims to provide a detailed account on various ASA developed and therationale behind them. Essentially, the report entails ASA 701 and ASA 570 (ISA 570) whichoutline instructions in regards to communication of key audit matters as well as materialuncertainty related to going concern concept. In addition to it, necessary recommendations aremade on the basis of research analysis that takes into account the Companies of AustralianBanking Industry which are listed on ASX 100 (Moroney and Trotman, 2016).MAIN BODYExplanation and Rationale for the new auditing standard ASA 701The new auditing standard ASA 701: Communicating Key Audit matters in theIndependent Auditor’s Report was developed in the wake of the global financial crisis. On 1December, 2015, the ASA 701 was incorporated by Auditing and Assurance Standards Board(AUASB) pursuant to section 227B of the Australian Securities and Investments CommissionAct 2001 and section 336 of the Corporations Act 2001. It is an equivalent standard to ISA 701.However, the two have slight differences as ASA 701 has been developed in accordance with thebusiness environment of Australia. Here, the term 'Key Audit Matters' relates to those state ofaffairs which have significant impact upon the financial reporting of a business entity for a givenfinancial period (Nicolaou, Nicolaou and Nicolaou, 2012). This Standard is applicable to:(a) Audit of a Financial Report for a given financial year on an annual or semi-annual basispursuant with the Corporations Act, 2001 (Aus 0.1); and(b) Audit of a General Purpose Financial Report or a complete set of such statements, for anyother purpose (Aus 0.1);(c) Audit of other historical financial information, if required (Aus 0.2).1

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