Audit & Assurance | Financial and Compliance

Running head: AUDITING AND ASSURANCE
Auditing and assurance
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1AUDITING AND ASSURANCE
Executive summary
Purpose of the task is concentrating on ASA 701 regarding communication of key audit matter
(KAM) under the audit report provided by independent auditor. Major purpose of this is the calls
made by the shareholders for gaining more information regarding they entities they are intended
to invest. The task will hence, research on the rationale in context of ASA 701. It will consider
mining industry and the entities under this those are listed under ASX. The primary objective of
KAM is addressing the resultant factor of the auditor from audit that has been done. It also refers
what is content and communicating indicators. The auditor must determine the all the relevant
information which has communicated during the year.

2AUDITING AND ASSURANCE
Table of Contents
Introduction......................................................................................................................................3
ASA 701..........................................................................................................................................3
Analysis of Key audit matter (KAM) for the selected mining companies......................................3
Alumina Limited..........................................................................................................................3
BHP Group Limited.....................................................................................................................4
Bluescope Steel Limited..............................................................................................................4
Evolution Mining Limited...........................................................................................................5
Fortescue Metals group................................................................................................................5
Newcrest mining..........................................................................................................................6
Orica Limited...............................................................................................................................6
OZ Minerals.................................................................................................................................6
Rio Tinto......................................................................................................................................7
Conclusion.......................................................................................................................................8
Reference.........................................................................................................................................9

3AUDITING AND ASSURANCE
Introduction
For a long while, the investor has been encompassing that they want an audit file to adopt
the technicality about the audit process. Hence, consequently, the paper of KAM was created. In
this concern, the auditor needs to clarify a separate segment of the audit report, which contains
the auditors' professional judgement. It is the most justified section in the audit of the financial
statement for the current period (Legislation.gov.au 2020).
ASA 701
The AUASB provide auditing standard ASA 701 regulating KAM in the independent
auditor’s section. It requires legislative provision and strategic decision-making. Introduction of
ASA 701 represents commitment of AUASB towards conformity with recent enhancement to the
auditor reporting that is established by IAASB. Major features of new standards include (i)
commanding communication for KAM under the report of auditors for the audit of listed firms
(ii) allowing the auditors from other organisations for deciding whether to add up KAM under
the auditor’s report (Legislation.gov.au 2020) (iii) the way in which the KAM is determined for
determining communicated matters with those charged with the governance in context of the
matters those require noteworthy attention from the auditors, determining notable matters to
include the same under reports of auditor (iii) documentation required for audit associated with
KAM (iv) circumstances under which the matters determined to be regarded as KAM is not
conversed under report of audit.
Analysis of Key audit matter (KAM) for the selected mining companies
This study describes the key audit matters for some of the Australian stock exchange
listed mining companies as follows:
Alumina Limited
 Describing the equity, the investment of Alumina Limited in AWAC is valued of $2.1
billion. In addition to the share of profit during the current year is $653.5 million by
approaching the equity accounting technique. The equity accounting method, which
project a similar accounting standard. As per the rules of Alcoa of Australia Limited
(AWAC entity) already prepares financial information hence no confirmation is required.
The financial information of AWAC entities, which follows US Generally Accepted
Accounting Principles (US GAAP), require a conversion to comply with AAS
(Aluminalimited.com 2020)
 The valuation of equity accounting is a fundamental audit matter because of the
expansion of the investment in the balance of associates. The adjustments, which is
reconcile by the group to convert into amounts that would be accounted for under US
GAAP to AAS. The equity-related investment of Alumina in AWAC is the most essential
in the balance sheet item in the consolidated financial report.
 The assessment of impairment indicator for Alumina Limited’s owners’ capital related
allocation in AWAC 2.1 billion. It is very essential factor for the balance sheet item at the
financial report in a consolidated manner. The financial measurement, which was
performed by Alumina to calculate whether there, was any objective indicators in equity
related investment in AWAC (Aluminalimited.com 2020)