The Accounting Standard

Running head: THE ACCOUNTING STANDARD
THE ACCOUNTING STANDARD
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Author Note

1THE ACCOUNTING STANDARD
Executive Summary
The introduction of the ASA 701 talks about the overall commitment of the auditors and the firm
to confirm with the enhancements and undertake the developments in a manner such that the
auditor reporting as developed by the International Auditing and Assurance Standards Board is
largely complied with. Hence, the primary aim of the report is to outline the manner in which,
the different firms shall be greatly impacted and the manner in which, the different firms as
present in the Banking industry in Australia tend to come up with the key audit matters and deal
with them.

2THE ACCOUNTING STANDARD
Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................3
Analysis...........................................................................................................................................4
The Commonwealth Bank...............................................................................................................4
Australia and New Zealand Banking Group....................................................................................5
National Australian Bank (NAB)....................................................................................................6
Westpac Bank..................................................................................................................................6
Bank of Queensland.........................................................................................................................7
Macquarie Bank...............................................................................................................................8
Recommendations............................................................................................................................8
References......................................................................................................................................10
Appendix........................................................................................................................................12

3THE ACCOUNTING STANDARD
Introduction
The Key Audit Matters can be rightfully described and defined as those matters in the
professional judgement of an auditor take place of the most significant matters in the financial
statement of the current period (Akathaporn, Lankton and Stivason 2018). The Key audit matters
are selected from those individual matters which are communicated with those who are charged
with governance. The main aim of the particular report is to outline the overall importance of the
ASA 701 and the different Key Audit matters which are outlined by the independent auditors. In
addition to this, the report will take the case of the banking industry and outline the Key audit
matters which will be largely defined by the ASA 701.
Discussion
The Key audit matters according to the new standard ASA 701 of the Australian Board
can be stated to be those crucial matters which hold utmost importance as per the personal
judgment of the auditor while the auditor was analysing the overall financial reports of the
company during the particular period (Johnstone, Rittenberg and Gramling 2019). The
particular key auditing matters are identified because they will be able to guide the company and
assist them to perform well during the operations and will assure that they are able maintain
consistency throughout the overall operations. The new standard has involved various aspects
into the operation which have been outlined as follows:
 The mandating of the Key Audit Measures communication in the different reports of the
auditors of the various listed companies (Brasel et al. 2016,p. 1350).
 Enabling the auditors of the different entities to undertake and make the decision with
respect to the Key audit matters must be included in the different reports.
 The key auditors will also be required to consider the different areas of risk which will
need considerably more assessment. In addition to this, the judgement of the different
auditors which involves the impact of the different management will be required to be
made.
 Various other documentations which are required to be told in relation to the KAM must
be identified (Köhler, Ratzinger-Sakel and Theis 2016).
 The ASA 701 would be required to be included in the annual reports of the companies
who prepare their report after the period of 15th December 2016.
 The primary purpose of the different organizations can be stated to be to ensure that the
different decisions which are undertaken, are done so in a manner such that there exists
considerable transparency in the different matters (Sirois, Bédard and Bera 2018, p. 150).
The ASA 570 has been formed in lieu of a proper guide to the different auditors which
can assist them to fulfil their overall responsibilities with respect to the appropriateness of the
management who are in charge of using the Going concern basis while preparing the financial
statements (Cordoş and Fülöp 2015). The auditing standard lays that, it is the duty of the auditor
to consider the risk associated with their overall operations as present. Moreover, the standard
also requires that, the auditor shall be largely supported and provided weight guidance to
undertake management assessment of the entity’s capability to undergo the particular concern
(Jermakowicz, Epstein and Ramamoorti 2018, p. 35).
The Lehman brothers filed for bankruptcy in the year 2008 and the firm had $639 billion
in assets whereas they had $619 billion in the debts (Tiron-Tudor, Cordos and Fülöp 2018, p.49).