Key Audit Matters in the Banking Industry

AUDITING & ASSURANCE

Auditing
Executive summary
It is one of the most important responsibilities of an auditor to make a valid opinion on the
financial statements and operations of the organizations in order to provide a proper report to the
stakeholders of the company. The auditor needs to check the ethnicity of different areas and the
management structure of the organization. In this report, various key audit matters that should be
reported by the auditor is clearly discussed. The banking industry is analyzed in order to
understand the key audit matters that are being used to analyze the statements of four major
banks of Australia.
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Auditing
Contents
Introduction................................................................................................................ 3
Case of Lehman Brothers Limited............................................................................... 4
Banking industry........................................................................................................ 5
 Suncorp group...................................................................................................... 5
 National Australian Bank...................................................................................... 6
Commonwealth Bank of Australia...............................................................................7
ANZ Bank.................................................................................................................... 8
Conclusion.................................................................................................................. 9
References............................................................................................................... 10
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Auditing
Introduction
Auditing standard ASA 701 consists of communicating key matters of the accounts of an
organization in the independent auditor's report. In accordance with this standard, the key audit
matters are the matters which are needed to be given special attention so as to highlight the
important transactions in the financial statements of the organization. In order to analyze such
transactions, the auditor should focus on the material misstatements that could have affected the
financial value of the organization in that particular accounting period (Hoffelder, 2012).
Application of the standard, the organization's auditor will be asked to mention the key audit
matters in the report so as to convey all the vulnerabilities present in the financial statements of
the organization to the management (Kaplan, 2011). The key audit matters play a very important
role in the organization because it will help them to determine their future. The financial
statements of the organization should be free from any kind of material misstatement and
vulnerabilities because they are being used by the investors and other stakeholders of the
company for determination of various decisions in relation to investment. Therefore the key audit
matters should be properly disclosed in the audit report (Lakis & Masiulevicius, 2017).
One of the most important responsibilities of auditors is to disclose all the factors of the accounts
and audit report clearly. Disclosing all the matters in relation to the audit report and the required
transactions should be done by the auditors of the firm (Lapsley, 2012). Key audit matters can be
defined as matters which require professional judgment and also are very sensitive in nature for
the profitability of the company. Each and every transaction taking place in the organization
should be properly analyzed so as to find vulnerability or any other kind of fraud so that the
performance of the business cannot be undermined. Key audit matters should be given more
importance because they determine the effectiveness of the financial reports of the organization
at the time of auditing (Livne, 2015) . All the audit procedures should be conducted in
accordance with the procedures so that the financial reports presented in front of the users can be
effective in nature. Also, proper analysis of the financial reports will help the organization to
avoid any kind of unbearable circumstances that may prevail on it in the near future (Wood,
2011).
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