Auditing Asa 701 - In the Banking Industry.

Running head: AUDITING ASA 701
AUDITING ASA 701
Name of the Student
Name of the University
Author Note

AUDITING ASA 7011
Executive Summary
The ASA 701 brought about the inclusion of the key audit matters which are essentially faced by
the enterprise in the annual reports of the firm. This move was undertaken to promote
transparency and integrated performance. The report has been given with the objective to
recognize the critical importance of the Key audit matters and highlight its inclusion in the
reports with the help of the listed firms in the Banking industry. Certain recommendations have
also been provided.

AUDITING ASA 7012
Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................3
Analysis...........................................................................................................................................5
The Commonwealth Bank...............................................................................................................5
Westpac Bank..................................................................................................................................6
Bank of Queensland.........................................................................................................................7
Australia and New Zealand Banking Group....................................................................................8
Macquarie Bank...............................................................................................................................9
National Australian Bank (NAB)..................................................................................................10
Recommendations..........................................................................................................................11
References......................................................................................................................................12
Appendix........................................................................................................................................14

AUDITING ASA 7013
Introduction
The report will follow a discussion of the key audit matters that are usually faced by an
enterprise while preparing the Auditing and accounting report. The key audit matters can be
essentially mentioned to be the matters whereby the auditor would be obliged to undertake a
judgement of the key audit matters which would be required in the financial statements of the
judgement period. According to Akathaporn, Lankton and Stivason (2018), the key audit matters
are chosen from various topics which are required to be held critical and generally charged with
governance. In consideration with this, the primary objective of the study can be stated to be to
highlight the significance of the new standard ASA 701 and to outline the various Audit matters
which are basically summarized by the individual auditors. In line with this, the given report is
outlining the issue of the banking and finance industry and will understand and critically
examine the key auditing problems that will be defined by the Accounting standard 701.
Discussion
The audit matters which have been underlined in the Standard 701 and designed by the
Australian Accounting board have been highlighted because these matters are of critical
importance and will be requiring immediate analysis and importance (Altawalbeh and
Alhajaya ,2019). However, this judgement and importance is generally based on the viewpoint
and judgment of the different auditors. In line with this, it becomes effective to understand that,
the key audit matters assist in guiding the company and helping them to perform well
understands the matters of priority which require key attention in order to be able to maintain the
overall consistency of the various operations. The key features of the ASA 701 can be identified
to be as follows:
1. The measurement and the inclusion of the Key auditing matters in the different annual
reports have become very essential for the companies which are listed in the stock
exchange.
2. The enablement of the auditors of the different enterprises is critical to undertake as it
assists in including the matters in the different reports.
3. The auditing matters which are being discussed primarily focus on the various areas of
risks which will be essentially required by the enterprise and needs assessment. It also
considers the management decisions which are generally made (Brasel et al., 2016).

AUDITING ASA 7014
4. If any documentation is required in consideration of the Auditing matters need to be
identified effectively.
5. The ASA 701 would be required to see to it that its inclusion takes place in all annual
reports which are being prepared after the 15th of December 2016.
6. The focus of the standard lies in ensuring that decisions can be made in complete
transparency (Tiron-Tudor et al., 2018).
The ASA 570 was essentially designed in order to act as a guidance to the various
auditors who and help them to see to it that their responsibilities can be fulfilled and the
management would be essentially required to see to it that, the Going concern aspect of the
business can be continued with while the financial reports of the enterprise are being prepared
(Köhler, Ratzinger-Sakel and Theis, 2016). The auditing standard has essentially mentioned
that, the auditor has to perform under the duty to consider the risks associated with the overall
operations and would also be required to ensure that they can provide proper guidance to the
management and their overall ability to perform well and consider the entity`s capability to
continue the business operations effectively (Knechel and Salterio, 2016). The case of the
Lehman brothers needs to be highlighted here in the context of which it can be mentioned that
the enterprise filed for the bankruptcy in 2008 whereby it had $639 billion under the asset section
and in line of this had $619 billion under the liabilities. This is one of the primary reasons why
the insolvency came as a big blow to the world and the mortgage industry was taken a back.
The enterprise began its operations on a humble note but later it took the procurement of
the US accommodation and experienced a boom. In association with this, the firm experienced
cracks in the beginning of 2007 and experienced the impact of the same (Kachelmeier, Schmidt
and Valentine, 2017). The enterprise although large in size, failed to assess the various risks
which were faced by it and had a strong influence. In addition to the management of the
enterprise, the auditors of the firm also underwent a considerate mistake whereby they were not
able to understand the defaults of the system and not identify the high level of leverage which
was essentially associated with the firm. This led to a fall in the share prices of the organization
and the valuation of the company took a toll.

AUDITING ASA 7015
Analysis
For the objective of this report, the enterprise which has been selected can be mentioned to
be the Banking industry and the 6 popular companies have been chosen for the assessment:
1. Commonwealth Bank.
2. Westpac Bank.
3. Bank of Queensland.
4. Australia and New Zealand Banking Group (ANZ)
5. Macquarie Bank.
6. National Australian Bank (NAB)
The various key auditing matters which are assessed by the banking enterprises are as follows:
The Commonwealth Bank
Loan impairment provisions
The PWC has been the auditor of the enterprise and this issue was taken as a KAM
because there exists certain subjective judgements which were made by the group. The auditing
group in this context carried out various analyses and pertaining to this, they arrived at a
conclusion that, the disclosures need to be met with the overall standards.
Judgemental valuation of financial instruments
The financial assets were characterized under the distinct stages and pertaining to this, the
matter was taken to be an auditing issue because it required critical judgement requiring value.
Various measures were undertaken (Commbank.com.au ,2020).
Provision for customer remediation and project costs associated with regulatory compliance
matters
The issue has been raised regarding the various provisions about the customer
remediation fees, the legal procedures, associated tasks and costs. The appropriateness of the