The New Standard of Auditing ASA701

Running Head: AUDITING & ASSUARNCE
AUDITING & ASSURANCE
Name of the Student
Name of the University
Author Note

1AUDITING & ASSURANCE
Executive Summary
The audits of financial statement give assurance over the information used by capital markets
and investors. Both audit and assurance are hand to hand process that is used for the
evaluation of company’s financial record. Auditing is consisting of making sure that whether
financial reports are according to the standard of account and principle of accounting. The
assurance checks that there is no such misrepresentation done in the financial records. Hence,
this report includes discussion about the new standard of auditing ASA701 and the issues that
resulted in the revision of ASA570. Further, analysis will be done on the KAM in
independent report of auditor. Hence, this report concludes that auditors of all the ASX listed
companies of “Food and staples retailing” industry is reporting key audit matters in their
independent report of audit. It can be recommended that KAM should be disclosed and
reported, as it is quite useful to the company and its users.

2AUDITING & ASSURANCE
Table of Contents
Introduction................................................................................................................................3
Discussion..................................................................................................................................3
Analysis of ASA701..............................................................................................................3
Analysis of ASA701 in respect of ASX Companies..............................................................6
Conclusion & Recommendations.............................................................................................13
Reference..................................................................................................................................14

3AUDITING & ASSURANCE
Introduction
Audit and assurance are the processes that are used for evaluating company’s
financial record. It is the process of verifying available records in firm’s accounting record as
per the accounting principle and standard and it also helps in verifying that whether record of
accounting is accurate or not. Audit evaluates the entries of accounting presents in company’s
financial statement and assurance is analyzing process that are used in assessing financial
records and entries of accounting. Usually, assurance is followed by the audit. Further, with
the change in trends, issues in assurance and auditing services has aroused. These issues and
trends create problem in the modern organization (Carson, Zhang and Fargher 2014).
In wake of global financial crisis, new auditing standard “ASA701-Communicating of
the key audit matters” in independent report of the auditor is developed. Development of this
standard is in the response of calls from the shareholders for knowing more about firms they
are going to invest. There was the request of investors regarding prior warnings of the
potential issues, which exists with the respect of entity’s ability for continuing as the going
concern that resulted in revision of “ASA 570/ISA 570-Going Concern” (Auasb.gov.au.
2020). Hence, this particular report includes the discussion of new auditing standard
ASA701. Further, analysis will be on the factors that resulted into ASA 570 revision. Lastly,
analysis will be on KAM in individual report of ASX listed entities in “Food and Staples
Retailing” industry.
Discussion
Analysis of ASA701
The auditing standard ASA 701 has come into effect after the collapse of Lehman
Brothers. In the investment banking field, Lehman Brothers was one of the biggest firms in
US, before it has collapses in 2008 because of bankruptcy. The major causes behind Lehman