Dec 2016 ATTEMPT

The two matters involved in the question (I assume that it’s the question Raven & Co and the audit of Crow Co) do not of themselves qualify as Key Audit Matters

Within the basis of opinion paragraph there will be given the details of the limitation of scope and thus the cause / justification for the modified opinion – lack of sufficient appropriate audit evidence so there is nothing to be gained by spelling out the limitation again within a KAM paragraph

With reference to the fire, the question clearly states “Audit procedures have confirmed that the matter has been satisfactorily reflected in the financial statements. There are therefore no misstatements relevant to this matter and no modification to the audit opinion is necessary.”

But a KAM paragraph is to be used to identify ‘Those matters that, in the auditor’s 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.’

But the question tells us that ‘Audit procedures have confirmed that the matter has been satisfactorily reflected in the financial statements. There are therefore no misstatements relevant to this matter and no modification to the audit opinion is necessary’ so this fire has not caused us any particularly measurable additional audit effort – we looked at the circumstances, we considered the client’s treatment and we’re happy

So not a KAM

I admit that this is a tricky area and we haven’t had any time for the idea to be developed in practice. That will come over the coming years but, until then, we’re walking on egg-shells

It all boils down to the skill and professional judgement of the reporting auditor

OK?