11.7 Communicating key audit matters in the independent auditor's report

Question 1

SA 701 deals with

Answer 1

Auditor’s responsibility to communicate key audit matters in the auditor’s report

Question 2

What it address

Answer 2

Auditor’s judgement as to what to communicate in the auditor’s report
Form and content of such communication

Question 3

Purpose of it

Answer 3

Enhance communicative value of auditor’s report by providing greater transparency about the audit performed

Question 4

Objective

Answer 4

To determine key audit matters and
Communicate those matters by describing them in the auditor’s report having formed an opinion on the financial statements

Question 5

Definition of key audit matters

Answer 5

Key audit matters are those matters that, in the auditor’s professional judgement were of most significance in the audit of the financial statements of the current period.
They are selected from matters communicated with those charged with governance

Question 6

Determining key audit matters

Answer 6

Determining key audit matters, the auditor has to consider:
Areas of higher assessed risk of material misstatement, or significant risks identified in accordance with SA 315
Significant auditor judgements relating to areas in the financial statements that involved significant management judgement, including accounting estimates that have been identified as having high estimation uncertainty
The effect on the audit of significant events or transactions occurred during the period

Question 7

Communication with those charged with governance regarding key audit matters invoves

Answer 7

Those matters the auditor has determined to be the key audit matters
If applicable, depending on the facts and circumstances of the entity and the audit, the auditor’s determination that there are no key audit matters to communicate in the auditor’s report

Question 8

SA 710 deals with

Answer 8

Auditor’s responsibilities regarding comparative information in an audit of financial statements