Page 135 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori

For example:
Considered Integral: When the notes to the financial statements include an explanation or the reconciliation
of the extent to which the financial statements comply with another financial reporting framework, the auditor
may consider this to be supplementary information that cannot be clearly differentiated from the financial
statements. the auditor’s opinion would also cover notes or supplementary schedules that are cross referenced
from the financial statements.
Not Considered Integral: When an additional profit and loss account that discloses specific items of expenditure
is disclosed as a separate schedule included as an appendix to the financial statements, the auditor may consider
this to be supplementary information that can be clearly differentiated from the financial statements.

SA 701 Communicating Key Audit Matters in The Independent Auditor’s Report

(CNO - SA 701.020) Introduction:
Guidance: SA 701 provides guidance regarding communication of Key Audit Matters. This SA deals with the
auditor’s responsibility to communicate key audit matters in the auditor’s report. It is intended to address both
the auditor’s judgment as to what to communicate in the auditor’s report and the form and content of such
communication.
KAM: Key Audit matter are those matters that, in the auditors. professional judgment, were of most significance
in the audit of the financial statements of the current period. Key audit matters are selected. from matters
communicated with those charged with governance.

(CNO - SA 701.040) Purpose
Purpose: Communicating key audit matters in the auditor’s report aims to increase its transparency and
communicative value. This provides the intended users of financial statements with more insight into significant
aspects of the audit for the current period. By doing so, users can better understand the entity and areas where
significant management judgment was exercised in the audited financial statements.
Objective as per SA 701: The objective is to enhance the communicative value of the auditor's report and assist
users in comprehending the most significant matters identified by the auditor in the audit of the financial
statements for the current period.

(CNO - SA 701.060) Scope (What should not be covered)
(Shortcut: Context in Social Media Marketing Disclosures)
Context: The communication of key audit matters in the auditor's report is in the context of providing an
opinion on the financial statements as a whole.
Separate Opinion: It should not be viewed as a separate opinion on individual matters.
Modified Opinion: It is not a replacement for the auditor expressing a modified opinion when required by the
specific circumstances of the audit engagement, as per SA 705 (Revised).
Material Uncertainty: It is not a substitute for reporting in accordance with SA 570 (Revised) when there is a
material uncertainty that may cast significant doubt on the entity's ability to continue as a going concern.
Disclosures: This communication is not a substitute for the disclosures required by the financial reporting
framework or those necessary for fair presentation.

(CNO - SA 701.080) Applicability of SA 701
1. Law or Regulation: It is required when law or regulation mandates the communication of key audit matters
in the auditor’s report.

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