ISA 701

Question 1

What is communication KAMs only relevant for?

Answer 1

The audit of listed entities

Question 2

What are key audit matters?

Answer 2

Those matters that in auditor’s professional judgement, were of most significance in audit of FSs of current period

Question 3

How are key audit matters selected?

Answer 3

From matters communicated with those charged with governance

Question 4

Examples of key audit matters (misstatement assessed planning)

Answer 4

Areas where risk of material misstatement has been assessed as high at the planning stage, for example complex accounting transactions

Question 5

Examples of key audit matters (FSs management judgment)

Answer 5

Agree of the FSs where management have had to exercise significant judgment

Question 6

Example of where management have had to exercise significant judgment on FSs?

Answer 6

Asset valuations or accounting estimates where there is a high level of uncertainty

Question 7

Examples of key audit matters (significant transactions)

Answer 7

The effect on the audit of significant events or transactions that occurred during the period, for example the acquisition of a subsidiary

Question 8

What do KAMs relate to?

Answer 8

Matters which are already included in the FSs

Question 9

What do KAMs not constitute?

Answer 9

A modification of the report or of the opinion. No separate audit opinion is issued in relation to each KAM