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Hello Sir, in the Opentuition note,under Interaction between KAMs,MURGC and Eom section
“IF what is regarded as a key audit matter is disclosed in the notes to the financial statements,the KAM does not need to repeat that information but must refer to relevant notes.”
1.Is it also mean if the key audit matter is not disclosed in the notes, the KAM will need to make the disclosure?
2.How about if some of the matter is a key audit matter and at the same time it is fundamental to the user’s understanding of the financial statement? Will under KAM or Eom? auditor judgement?
Thank you.
The clue is in its name – key AUDIT matter – so it is something the AUDITOR is responsible for reporting. All we are saying here is that if it is the case that a matter which gives rise to a KAM has been disclosed in the notes, it does not need to be repeated.
So 1. – absolutely, in the auditor’s report is where you should expect to find all details of KAMs disclosed.
It must be something about the financial statements – i.e. an ACCOUNTING matter – which is an EoM and it must be adequately disclosed in the financial statements.
Consider this – common examples of matters reported as EoMs are disclosure of uncertainty about future outcome of litigation and disclosure of non-adjusting events – there is no difference in how this is reported as an EoM for any company – listed or unlisted.
KAMs provide a “layer” of additional reporting only for listed companies. For a listed company, if a matter is already reported as an EoM it does not matter whether that matter meets the definition of a KAM – since it has already been reported as an EoM it doesn’t get repeated.
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