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Hi
The KAM paragraph is mandatory for listed entities and can voluntarily be included in non-listed entity’s audit report, i need to ask that the emphasis of matter paragraph (if required) can also be used for both listed and non-listed entities or just non-listed entities?Yes ISA 701 applies:
– to listed entities;
– in other circumstances when the AUDITOR decides to communicate KAM in the auditor’s report;
– when the auditor is required by law or regulation to communicate KAM in the auditor’s report.See here – YES – an auditor’s report with a KAM section may also need EoM
https://opentuition.com/topic/kam-vs-eom-paragraphs-in-listed-companiesKAM and EOM have entirely different purposes and are NOT mutually exclusive.
Thanks a lot now its cleared. the link you provided also was great actually i asked this question after listening to the same presenter in one of his webinar video and it is really kind of misleading giving statements like this.
Is it at all possible if, in kind, you could provide me with the link to this webinar video? Then I might be able to do something about the source.
here is the link:
https://vimeo.com/317348587you can watch it full if got time but watch specially from 24 minutes to 31:22 where he actually give statement about KAM in listed and EOMP in non-listed company which is confusing and he also said that KAM cannot be used for non-listed companies but in my knowledge as i have mentioned in my question as well that KAM can be used in non-listed company also if auditor voluntarily wants to use it or management or TCWG make a request to use it if i am correct. Do let me know after watching that what you think of the statements made and about the presenter.
Thank you for the information – I will write to ACCA as this is carrying an ACCA logo. It is not true that reports for listed/unlisted “is segregated” – the only distinction is that under ISA 701, KAM is a requirement for listed companies. But, as I have said, ISA 701 would also apply if, because of some other requirement, the auditor’s report includes KAM. So in the exam you will assume KAM for a listed entity but not for unlisted.
From ISA 760: “There may be a matter that is not determined to be a KAM …. (ISA 701) (i.e. because it did not require significant auditor attention), but which, in the auditor’s judgment, is
fundamental to users’ understanding of the financial statements (e.g. a subsequent event). If the auditor considers it necessary to draw users’ attention to such a matter, the matter is included in an Emphasis of Matter paragraph … “. SEE my section “Interaction between KAMs, MURGC and EoM” on page 117 of the notes.The explanation of “precedence” of KAM is misleading – if a matter IS a KAM AND an EoM it is reported as a KAM – but if it is not a KAM it will be reported as EoM. This is consistent with the principle that anything that is reported on is reported on only in one place.
Thanks for your great explanation of the matter as i was also of the opinion that in the exam question KAM is just for listed company and should not be included when dealing with non-listed company . Yes the “precedence” of KAM over EOMP statement is misleading as it kind of gives the impression that they are mutually exclusive which is incorrect.
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