[scared123]

@omensa said:
I don’t think KAM was worth mentioning here. If the issue has formed a basis for qualification, it will be discussed in Basis for Qualified Opinion para, not in KAM

Same goes for EoM. Any matter discussed in EoM does not become part of KAM

Hmm, yes definitely. You are right saying that the qualification of the matters will need to be explained in the Basis of opinion paragraph. My point here is that the client is LISTED, you can check under ISA 701 if not mistaken, it has become a requirement to include KAM paragraph, whether or not there is a matter that is significant to the audit. If yes, you communicate, the audit might be modified, but the matter included in the KAM is not discussed in respect of the modified opinion.

[scared123]

@cheychey21 said:
Am I the only one who thought EOM should have been a KAM?

You mean Q2 the EOM paragraph issue?
I personally don’t think so.
KAM is determined when the matter has been communicated to charged with governance, then matters that requires significant attention during the audit – which they said the audit evidence has sufficient and appropriately obtained, does not pose any challenges to obtain the evidence, then the final KAM which is most significant in the current audit.

I don’t think KAM is suitable at this point.

[scared123]

Q5(i)

– Materiality calculation – material.
– IFRS 15 revenue shall be recognised only when the performance obligation has satisfied. Explain to the scenario that the risk and rewards of the goods have not arrived at the customers, no revenue shall be recognised, only deferred the income until the performance obligation has been satisfied with.
– This might be the accounting policy for several years, comparative figures might also be misstated, shall discuss with those charged with governance should the adjustment being made in the opening retained earnings figures (IAS 8 retrospective adjustments for error)
– Auditors shall also obtain the contract between the company and the customers to ensure the revised terms in the contract has been signed by the customers.
-Discuss with those charged with governance the qualification of the auditor’s report and also the wordings to be included.

Some points I have included in my answer in Q5(ii) impact of the auditor’s report if no adjustments would made will be:-

– If material, but not pervasive, qualified ‘except for’ opinion.
– If material and pervasive, adverse opinion.
– Modification reasons and effect of the quantification effects to the FS in basis paragraphs
– Immediately after Opinion paragraph
– Finally, the client is a listed client, KAM paragraph shall be included as it is a requirement for all listed companies. If there is a significant matter which the auditor needs to communicate, then include the explanations in this paragraph. If no significant matters have found in the performing of the audit, shall included in the KAM paragraph stated that nothing have been found to be significant in performing the audit.

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