Auditing and Assurance Services

Running head: AUDITING AND ASSURANCE SERVICES
Auditing and Assurance Services
Name of the Student
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Author’s Note

1AUDITING AND ASSURANCE SERVICES
Executive Summary
The first part of the report shows that the new auditing standard is majorly important for
disclosing additional information on the key audit matters that can prevent large corporate
failures like Lehman Brothers. The second part of the report shows that the auditors of the
mining companies of Australia are majorly efficient to report the key audit matters.

2AUDITING AND ASSURANCE SERVICES
Table of Contents
Introduction................................................................................................................................3
ASA 701 Rationales...................................................................................................................3
KAMs of the Australian Mining Industry..................................................................................5
Newcrest Mining....................................................................................................................6
Evolution Mining...................................................................................................................6
Downer Edi Limited...............................................................................................................6
Whitehaven Coal....................................................................................................................6
Rio Tinto Limited...................................................................................................................7
BHP Billiton...........................................................................................................................7
Conclusion..................................................................................................................................8
References................................................................................................................................10

3AUDITING AND ASSURANCE SERVICES
Introduction
Auditing is the profession where the auditors need to inspect the accounts of their
audit clients in order to ensure that they are prepared as well as presented in the truest and fair
manner in the absence of any kind of material misstatements (Knechel and Salterio, 2016).
There are instances where the auditors failed in discharging their professional responsibilities
in the appropriate manner that led to major consequences such as business failure of the
companies and corporate collapse. It can be seen that the new auditing standard “ASA 701
Communicating Key Audit Matters in the Independent Auditor’s report” was introduced after
the occurrence of the world financial crisis in the year 2008. It is considered that there are
certain key reasons that contributed towards the new auditing standard of ASA 701. For the
investors, it has become a major tool to gain increased understanding as well as information
on the significant matters in the financial statements of the companies in which they are
interested to invest in. At the same time, the financial crisis of 2008 has increased the
attention towards the assessment of the going concern assumptions of the companies. One of
the key aims of this report is to discuss the rationales for which the new auditing standard
was introduced and this part considered the collapse of Lehman Brothers. Another aim of this
report is to evaluate the efficiency of the auditors in reporting the key audit matters in the
Australian mining industry.
ASA 701 Rationales
Purpose – The main purpose of the new auditing standard ASA 701 can be seen in ensuring
the improvements in the auditor’s report’s communicative value by providing transparent
information on the audit performed. In addition, another crucial purpose of this can be seen in
ensuring the delivery of additional information on the significant audit matters that can
materially misstate the financial statements of the audit clients. Providing information on the
crucial accounting judgments used in the financial statements of the clients is considered as
another purpose of the new auditing standard ASA 701 (auasb.gov.au, 2019).
Objectives – There are some crucial objectives of this new auditing standard related to key
audit matters and most crucial one is to develop obligatory requirement for the auditors for
the correct determination of the key audit matters and then, form the appropriate audit
opinion on the basis of the outcomes of the determined key audit matters. It needs to be
mentioned that ensuring the appropriate communication of these key audit mattes to the users