ASA 701: Disclosures and Key Audit Matters in the Mining Industry

AUDITING
ASA 701

ASA 701
Executive Summary
Disclosures have become an important consideration when it comes to the current scenario of
the corporate. It is imperative that the stakeholders should be well aware of the happening
that will help in projecting a sound concept. The introduction of ASA has provided benefit to
the stakeholders as they can easily peer into the key audit matters. To conduct this study,
mining industry is considered and from the industry four potential players are selected for the
report. The report revolves around key audit matter and the manner in which the company has
provided adequate attention to it.
2

ASA 701
Contents
Introduction.......................................................................................................................................2
ASA 701 and the case of Lehman Brothers........................................................................................2
Mining industry.................................................................................................................................3
RIO TINTO..........................................................................................................................................3
BHP BILLITON.....................................................................................................................................4
Hawkstone Mining.............................................................................................................................5
METALS BANK Ltd..............................................................................................................................6
Conclusion.........................................................................................................................................7
References.........................................................................................................................................8
3

ASA 701
Introduction
A lot of financial discrepancies were observed around the world when the case of Lehman
brothers erupted and showcased various issues. Various organizations were affected by this
crisis and many countries were observing problems arising in their markets. The downfall of
Lehman brothers affected the entire community of auditors and made it suspicious in nature
because of the failure to achieve the management of the duty that was to be fulfilled by them
(Venanci, 2012). It is very important for the auditors to provide a true and fair view of the
financial statements of the organization. If any kind of negligence is observed while
assessment of the data then the financial statements will consist of compromise data because
of which the actual facts of the business will not be revealed (Venanci, 2012). It was
observed that the years 2001 to 2008 were very e astonishingly doing for various enterprises
in terms of generating profit. Organizations tried to earn profits and start investing in the
mortgage market during this period but were not able to fulfill their desires. Proper attention
was not paid because of which the mortgage market was already destroyed and another
mistake of the organization was to offer private financing, real estate, and leverage lending
because of which all of its assets were compromised (Viney, 2010).
ASA 701 and the case of Lehman Brothers
The ASA 701 states many important facts and figures that should be revealed by the
organization in the financial statements. The application of the standard will not only health
Organization to maintain the science city of the balance sheet but would have also improvised
the Goodwill of the organization (Rezaee & Kedia, 2012). The absence of the standard will
not only collapse the organization but also create problems in the communication and
concealment of facts and figures that are being depicted by the firm in the financial
statements that are being provided to the stakeholders and board members. These loopholes
were the major factors affecting the business of Lehman Brothers.
Negligence and absence of facts and issues of concern while drafting the financial statements
were:
4