KAM

1-where is the position of KAM when a qualified or adverse opinion is issued(is it immidiately after basis of qualified or adverse opinion paraghraph)?

Here’s the specific extract from the article that you have read:

‘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.’

2-is it correct to say where a matter is significan it is required by new ISA to be included in KAM instead of other matter or emphasis of matter?

And here’s the next extract that specifically addresses your second point:

‘The auditor is prohibited from using an Emphasis of Matter paragraph or an Other Matter paragraph when the matter has been determined to be a KAM. To that end, the IAASB has emphasised that the use of an Emphasis of Matter paragraph is not a substitute for a description of individual KAM.
If a KAM is also determined to be fundamental to users’ understanding, the auditor may present this issue more prominently in the KAM section. Alternatively, the auditor might also include additional information in the KAM description to indicate the importance of the matter.
There may be a matter which is not determined to be a KAM, but which, in the auditor’s judgement is fundamental to users’ understanding and for which an Emphasis of Matter paragraph may be considered necessary.’

3-where is the position of KAM when we have EOM paragraph or other matter paragraph(is it immidiately after EOM or other matter paragraph)?

Kam before EOM and OM paragraphs

4-how should we determine whether an area should be included in KAM or not?I know that susceptiple areas to higher risks,areas which involves a high degree of estimation and judgement which are significant (such as Fair value),effect of new IFRS(such as ifrs 15 or ifrs 16),impairment testing on goodwill are good examples,BUT please explain me more examples if it is possible…

(IFRS 16 is not in the September 2016 syllabus)

Here’s the extract from the article that answers point number 4:

‘DETERMINATION OF KAM
The definition in paragraph 8 of ISA 701 states that KAM are selected from matters which are communicated with those charged with governance. Matters which are discussed with those charged with governance are then evaluated by the auditor who then determines those matters which required significant auditor attention during the course of the audit. There are three matters which the ISA requires the auditor to take into account when making this determination:

Areas which were considered to be susceptible to higher risks of material misstatement or which were deemed to be ‘significant risks’ in accordance with ISA 315 (Revised), Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment.
Significant auditor judgments in relation to areas of the financial statements that involved significant management judgment. This might include accounting estimates which have been identified by the auditor as having a high degree of estimation uncertainty.
The effect on the audit of significant events or transactions that have taken place during the period.

The auditor must determine which matters are of most significance in the audit of the financial statements and these will be regarded as KAM.’

Further specific examples are not really appropriate – as the definition in ISA 701 states “KAMs are) 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.”

5-and my last question is about SIGNIFICANT.how should we find out whether a matter is significant or not?is it only a matter of auditor’s judegement?or are there any other guides?

It’s entirely down to the individual auditor’s assessment and clearly, therefore, the judgement of a matter to be significant in the mind of one auditor could very well be assessed by another auditor as insignificant

OK?

You’re welcome – sorry it’s such a long response!