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Hi
I am confused with the use of different paragraphs:
Can you please advice if the below assumptions are true or false?
1. An auditors report should ALWAYS include a KAM paragraph (if there is a KAM – highlight it, if not paragraph should just state “no key audit matter to communicate….”)
2. KAMS are part of standard report(does not modify audit report) but EOM paragraph MODIFIES the auditors report?
3. KAM paragraph CAN be used by both listed and non listed entities?
1. Yes but only for listed companies
2. Please refer to Chapters 23-25 of our notes. The terms “unmodified” and “modified” should (strictly) be reserved to refer only to the audit OPINION. As is clearly stated on page 121 an EoM should be thought of as an additional section which does not affect the audit opinion.
3. KAM MUST be used included in an auditor’s report for listed companies. ISA 701 also applies if an auditor decides to communicate KAMs in an auditor’s report for a client that is not a listed entity.
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