Analysis of Key Audit Matters in Australian Retailing (2017)

This report provides an analysis of key audit matters (KAMs) across five companies in the Australian retailing industry for the fiscal year 2017, in light of the new auditing standard ASA/ISA 701. It compares companies like Big W, Myer, Kogan, Harvey Norman and Byte Power in terms of their size, performance, business activities, and audit firms. The report highlights the common KAMs disclosed in their audit reports, such as home improvement exit, carrying value of property, plant and equipment, inventory provisioning, supplier rebates, impairment of intangible assets, cost of inventory, sales estimates, warranty claims, IPO offerings, assessment of controls, recoverability of receivables, and valuation of investments. The analysis focuses on the differences in how these matters are disclosed and addressed by different audit firms, emphasizing the importance of these KAMs for users to assess the risk and investment potential of these companies. Desklib offers more resources including past papers and solved assignments for students.

Audit Assignment

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By student name
Professor
University
Date: 13TH Sep 2018.
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Key audit matters are those that are important to the success of the company and these are
elements in which there are chances of risk elements that might be there. The main aim of the
auditor is to find such elements, check whether there are any risk present in that or not and how
can they mitigate those risks for the future. It can help in drawing attention of the users on such
elements that are detrimental for the user and they should see them before investing in the
company or not. The differences between the key audit matters as disclosed within and between
the following audit firms-
Big W – In this case only three key matters have been specified that includes Home
Improvement Exit, carrying value of the property, plant and equipment and provisioning of the
inventory. These were the main areas in which the auditor had put more focus and long with that
they have also stated the key steps that they have taken in auditing these key matters and what is
their overall opinion with regards to that has also been stated correctly (Alexander, 2016). The
main aim is to bring to the notice of the user areas that need more attention.
Myer – in case of Myer the auditor is PWC and they stated all the key audit matters in an
extensive manner. The main matters included are accounting estimates disclosures, supplier
rebate, inventory provisioning, impairment of intangible assets are few important matters that the
auditor has highlighted in his audit matter (Belton, 2017). The auditor has also stated the steps
that they have taken for seeing the audit matters and taking the important steps in checking
whether they are materially correct or that and there is no misstatement with regards to those
items.
Kogan – In case of Kogan the company should check the key audit matters which are inclusive
of high volumes of cost of inventory, total sales estimates that have been done by the company.
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The warranty claims have also been discussed in detail by the company. The auditor has also
highlighted the IPO offering that are done by the company. Proper highlights have not been done
by the auditor, with less details. The auditor has also stated the steps that they have taken in
verification of these items that they have been stated in the annual audit report that has been
issued. They have not highlighted the points.
HARVEY NORMAN – In case of Harvey Norman, key audit matters that are included
assessment of controls, recoverability of receivable and franchises and valuation of investment
and various other properties have been highlighted the auditor. The auditor has stated key audit
matters are those matters which are detrimental to the success of the company and those areas in
which there are any chances of material misstatements that might take place. The auditor have
also stated the reasons why these matters are important and what steps they have taken to ensure
that these matters are correct and do not include any risk element (Arnott, Lizama, & Song,
2017).
Byte Power – In case of BYTE POWER the key audit matters that have been stated includes
valuation of intangibles and valuation of tangibles for the company. They have also stated the
key steps that they have taken to ensure that there are no risk elements in that and they are free
from all kind of misstatements and they have also stated what steps they have taken to check
these accounts. The auditor has stated only a brief description of the key matters and but there
are no details provided like other companies, highlights has also been provided.
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References
Ale ander he Changing ace of Accountabilityx , F. (2016). T F . he ournal of Higher EducationT J , 71(4), 411-
431.
Arnott D izama Song atterns of business intelligence systems use in organizations, ., L , F., & , Y. (2017). P .
ecision upport ystemsD S S , 97, 58-68.
eltonB , P. (2017). Competitive trategy Creating and ustaining uperior PerformanceS : S S . ondon MacatL :
nternational ltdI .
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