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Hi Sir,
Just to clarify that if auditor issue a qualified or Adverse opinion, it is consider a key audit matter (KAM) also because it is significance n material.
This article as below means that there are no OTHER KAM except the example?
Extraction from article
Example – Qualified ‘except for’ opinion issued but no key audit matters
The audit of Turquoise Industries Co has been completed and the auditor discovered a material amount of research expenditure which had been capitalised as an intangible asset in contravention of IAS 38 Intangible Assets. The finance director refused to derecognise the research expenditure as an intangible asset and include it in profit or loss and the auditor therefore issued a qualified ‘except for’ opinion on the basis of disagreement with the entity’s accounting treatment for research expenditure.The auditor has concluded that there are no KAM which require to be communicated in the audit report. The KAM section of the report will therefore be as follows:
Key audit matters
Except for the matter described in the Basis for Qualified Opinion section, we have determined that there are no key audit matters to communicate in our report.’Please help with my understanding on this thanks 🙂
‘This article means that there are no OTHER KAM except the example?’
NO
The example Turquoise is merely showing an example of a report where there are no other key audit matters but it is not stating that there will always be no other key audit matters
It’s just that, in tis example, the ONLY key audit matter is the one that has been included within the Basis for Qualified Opinion paragraph
OK?
Sir as what u mention
(The example Turquoise is merely showing an example of a report where there are no other key audit matters but it is not stating that there will always be no other key audit matters)
it should be there might be other KAM right?
(It’s just that, in tis example, the ONLY key audit matter is the one that has been included within the Basis for Qualified Opinion paragraph)
So this example : research expenditure as an intangible asset in the basis of qualified opinion is a KAM right ?
Can I conclude that all qualified and Adverse opinion issued is a KAM? Or it depends?
‘Can I conclude that all qualified and Adverse opinion issued is a KAM? Or it depends?’
I think that it’s pretty safe to assume that ANY matter giving rise to a qualified opinion will be a KAM
Ok thanks Sir
I have two more questions relating to this topic.
1. What does this means:
When the auditor has expressed an adverse opinion on the financial statements and communicates KAM, it is important that the descriptions of such KAM do not imply that the financial statements as a whole are more credible in light of the adverse opinion.
2. When do we use the word section or paragraph in the audit report?
As stated in the article “material uncertainty related to going concern’ is a separate section
Then basis for qualified opinion section no longer state as paragraph?
Article state : the section ‘material uncertainty related to going concern’ is after the basis of opinion Paragraph but before KAM..
I’m confused on this two terms in the audit report and when to use it?
Thanks 🙂
It could be that a paragraph is just an element of a section
There could be three or four paragraphs identifying key audit matters and they will all appear in the Key Audit Matter section
When an adverse opinion is issued followed by the KAM section, it is important that the KAM section CANNOT be interpreted as being more believable just because the KAMs are separately identified
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