Auditing Theory and Practice: ASA 701 and Key Audit Matters in Utilities Industry

Running head: AUDITING THEORY AND PRACTICE
Auditing Theory and Practice
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AUDITING THEORY AND PRACTICE
1
Table of Contents
Introduction:....................................................................................................................................2
ASA 701: Rationale.........................................................................................................................3
ASA 701: Explanation.....................................................................................................................4
Key Audit Matters of Companies engaged in Utilities Industry.....................................................5
Carnegie Clean Energy Ltd:........................................................................................................6
AGL Energy Ltd..........................................................................................................................6
Ausnet Services Ltd.....................................................................................................................7
APA Group..................................................................................................................................8
Conclusion and Recommendation...................................................................................................9
Reference.......................................................................................................................................10

AUDITING THEORY AND PRACTICE
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Introduction:
Auditing is a profession which deals with the examination of the financial statement of
the company. Auditing process also includes the evaluation of the financial statement of any
organization. The auditing is done by the auditor to validate and authenticate the fair and
accurate representation of the transactions which are claimed by the company by producing the
financial statement of the company. From the last decade it can be seen that the auditing as a
whole profession and auditor face a huge amount of criticism due to alteration of transactions
and also omit the misstatement made by the company in their financial statement of the
company. Due to this fact a new standard has been implemented in respect to reduce the audit
gap between the auditor and the auditing report of the company. The standard which have been
introduced in the system is Communicating Key Audit Matters in the Independent Auditor’s
Report (ASA 701) .This standard was introduced as a replacement of the existing guidelines of
ASA 570 Going Concern and many other regulation which deals with the auditing profession.
This report states about the implementation of the new standard ASA 701 and also the logical
view of the ASA 701 and also the related particular accounting standard. This report also states
about the Key Audit Matters (KAM) in the auditor’s report which is provided by the auditor in
the mining companies who are listed with Australian Stock Exchange (ASX).
ASA 701: Rationale
As in the case of Lehman Brothers, the business failure can be seen and auditors of the
company have taken into consideration for the downfall of the company. The management of the
Lehman Brothers are involved in many acts which can be termed as unethical and
unprofessional. The management of the company states to use the Repo rate in such a manner