ACC707 AUDIT ANALYSIS - Case Study Assignment Solution

Introduction

The key audit matters provide a risk analysis about a company and created by the international body of audit and assurance standard board. Its main purpose is to improve the report of auditor in terms of transparency as well as address potential challenges that stakeholders face. The auditor reporting standards of 2015 are applicable to different companies and provide clear auditing analysis in relation to risk management (Gorodilov & Pastukhova, 2018). In different countries, the key audit matters are subjected to a different level of industries. For instance, in the UK and Netherlands, the new standard of the audit was implemented in 2016. Under the public company of accounting in the US, the board has provided different levels of standards for audit. 

In this research framework, the critical analysis of key audit matters in auditor’s report will be presented. It will be done in relation to ASX 100 listed companies that can help evaluate the efficiency of matters of key audit. The key focus of this research is on the key audit matters. 

International Standard on Auditing

Extent of the international standard of auditing is wide and it implies effective communication. The prime responsibility of the auditor is to communicate about different matters of the report that related to auditor’s judgment and communication content (Gorodilov & Pastukhova, 2018). The rationale of key audit matters is to mainly provide effective communication under influence of transparency. The communication in key audit matters is central to work with the companies’ financial statements and to identify significance of these statements for the current time. In this regard, communicating audit matters support intended users in different management areas and offer valuable judgment for the financial statements. The audit matters work significantly and engage in governance ineffective audit operations. 

This communication is also effective to formulate an opinion for the financial statement. The international standard of audit offers a complete set of entities’ financial statement. It is applicable to the report of auditor by law. Main purpose of the international standard of audit are, for instance, key audit measures focus on the professional judgment by the auditor. It has to determine the matters that are crucial to analyze when performing an audit (Gold, Gronewold & Pott, 2012). For this purpose, the auditor has to take into account significant risks, higher assessed risk, accounting estimates, high uncertainty and effect of the significant events or transaction of the respective period. 

There are different audit standards that work for qualitative and quantitative research patterns. In different counties, like Greece, Cyprus, Romania, Brazil, UAE and South Africa, the quantitative analysis is based on different audit standards. For instance, it includes holding roundtables with preparers, auditors, committee members and regulators, and it helps to report audit matters to the different countries for adoption. It helps the auditor to identify key areas to work and include a professional judgment for the listed companies in ISA 701 (Shim, Lee & Rho, 2015). 

Auditing Standard ASA 701

A relative improvement in the auditors’ reporting standard is ISA 701. It is equally applicable to the audit of the financial statements of different companies and for communication of audit matters. This audit is also applied to the law and regulations that are relevant to different practitioners and different sized entities. It is helpful to address the judgment of auditor, its communication and content. The ISA 701 is about the Australian legislative environment that is developed in accordance to maintain quality of audit (Gold, Gronewold & Pott, 2012). This auditing standard is helpful to offer explanatory material for the audit matters in the independent report by auditor.