Auditing & Assurance: Analysis of Key Audit Matters and ASA 701

Auditing &
Assurance
isha chuhan

Contents
Introduction............................................................................................................................................2
Case study of Lehman Brothers.............................................................................................................2
Explanation and analysis.......................................................................................................................3
ASA 701 ASX listed company..............................................................................................................4
Key audit procedures before and after 2016..........................................................................................7
Recommendation...................................................................................................................................8
Conclusion.............................................................................................................................................8
References............................................................................................................................................10

Introduction
This report analyses and examines key audit matter matters as per the newly derived
accounting standard ASA 701 that further is responsible to communicate audit matters to the
auditor’s independent report of auditors (Brunelli, 2018). The purpose is to check the relevance
of ASA 701 in association in the context of ASX organization. It is observed that accounting
standard was undertaken at the time of global crisis (Brunelli, 2018). Apart from this, this
report mainly considers the collapse of international company “Lehman Brothers.” This
financial crisis has led to the formation of several accounting standards (Brunelli, 2018).
This report communicates main audit matters in the report of the Auditor that ensures that
financial statements have been examined properly. Firstly, this report will elaborate ASA
570 the concept of going concern and further it will undertake the understanding of audit
risk and materiality concept of Newcrest Mining Corporation Group (Mustaffa, Sannusi,
Hasan, and Saad, 2017). The significance of materiality concept is checked through the
review of audit of the financial reports of Newcrest Mining Corporation Annual report.
Further, this report will examine the crucial standards related to ASX 100-registered
organisation. These companies are among largest mining companies, which operate at the
cross-border level (Mustaffa, Sannusi, Hasan, and Saad, 2017).
Case study of Lehman Brothers
This case is regarding the bankruptcy case that has been filed by Lehman Brothers in United
States. This disruptive scandal was the biggest scandal of that time. The scandal was due to
inadequate compliance of the process of material auditing. This report will further lead to the

development of some accounting standards (Chen, and Su, 2016). Filing the case will lead to
the liquidation of bankruptcy events, which further includes the events of economic
breakdown in the year 1930 especially when the conditions started getting worst. As per
Auditing and assurance standard board, ASA 701 has been used to establish certain
regulations that directly affect the auditing and communication the main audit matters as per
the auditor`s report. The characteristics of AASB are to monitor the legitimacy and validity
of main audit matters (Chen, and Su, 2016). For analyzing, the standards are further applied to
the ASX 100 companies in the mining sector, which is related high-risk area where it should
be disclosed in independent auditor`s report. There were many loopholes, which has created
as the inadequate internal auditing and inadequate auditing has been addressed (Chen, and Su,
2016).
Explanation and analysis
It has been reported that there is a need to save ASA 701 in Lehman Brothers. As per
accounting standard ASA701, the confidential data was exposed as per the situations in the
company. Lack of application of collapse of Lehman Brothers, the company had to face
bankruptcy (Chen, and Su, 2016). Lehman Brothers has allotted loan to US people but due to
financial crisis, the market downtrodden with capital market and people who took loan from
Lehman Brothers and could not get the same return value of their houses not even similar to
that sum in March 2007 (the great depression). The case was related to suppression and
communication level of the crucial facts that was not at all less than the financial worth of the
company (Knechel, 2016). Dodges led to the failure and collapse of the company. Therefore, it