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KAM and EOM

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AAA Exams › KAM and EOM

  • This topic has 5 replies, 2 voices, and was last updated 4 years ago by Kim Smith.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • June 4, 2021 at 8:29 am #623069
    aisy
    Member
    • Topics: 4
    • Replies: 3
    • ☆

    Hi sir,

    I did the Kilmister Co question, the requirement was to criticize the audit report. The statement below confuses me:
    ____________________________________________________________________

    “Other information
    The Company’s principal activity is the manufacture and installation of sound-proof partitions for domestic and industrial buildings. The Company therefore engages in long-term contracts which are incomplete at the reporting date and which are material to its revenue figure. The installation process is complex and significant judgement is applied in assessing the percentage of completeness which is applied to calculate the revenue for the year. The significance of this judgement requires us to disclose the issue as other information which is relevant to the users of the financial statements”
    _____________________________________________________________________

    My confusion is, didnt EOM include matter that could draw the reader’s attention to a
    significant uncertainty or judgement but not the one reported to TCWG. The scenario never state whether it has been disclosed to TCWG or not, but the answer says it need to be reported under KAM not EOM.

    My question is, How to know if it is for KAM or EOM when ‘reported to TCWG’ is silent?

    As my understanding is that, both need to be significant but the difference on whether the matter has been reported to TCWG.

    If my thought is wrong, please educate me Sir. Thank you sir.

    June 4, 2021 at 9:19 am #623073
    Kim Smith
    Keymaster
    • Topics: 133
    • Replies: 8298
    • ☆☆☆☆☆

    EoM is not an alternative to KAM – they serve completely different functions. See page 109 of the notes – EoM to point out something properly disclosed in the financial statements and KAM to describe matters of most significance to the audit (listed company only).
    (Related posts here https://opentuition.com/topic/listed-company-and-eom)

    What has been described here under an incorrect heading “Other information” CANNOT be EoM – there is NO NOTE x-REF (!)
    That it would have been communicated with TCWG is implied by “significance of this judgement”.

    June 4, 2021 at 11:19 am #623096
    aisy
    Member
    • Topics: 4
    • Replies: 3
    • ☆

    Apologies sir, but what is “NO NOTE x-REF (!)” ?

    June 4, 2021 at 1:39 pm #623129
    Kim Smith
    Keymaster
    • Topics: 133
    • Replies: 8298
    • ☆☆☆☆☆

    An EoM MUST have a cross-reference (“x-ref”) to a NOTE in the financial statements (where more details concerning the matter can be found). Please refer to example on page 117 of the notes.

    June 4, 2021 at 4:12 pm #623180
    aisy
    Member
    • Topics: 4
    • Replies: 3
    • ☆

    Understood. Thank you so much sir!

    June 4, 2021 at 5:14 pm #623197
    Kim Smith
    Keymaster
    • Topics: 133
    • Replies: 8298
    • ☆☆☆☆☆

    You’re very welcome!

  • Author
    Posts
Viewing 6 posts - 1 through 6 (of 6 total)
  • The topic ‘KAM and EOM’ is closed to new replies.

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