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1) Greetings Tutor, I hope you are doing well. Can you help me with the following?
Does KAM constitute a modification of Audit Report? .
I think that in case of a listed entity it will not as it is required by ISA 701, but in case of an Unlisted Entity it will as it depends upon the auditors judgement and (nature and significance) of the matter.But in study text of BPP it has mentioned that KAMs do not constitute a modification of report, they are part of standard report which must be tailored to each company’s circumstances.
When i asked the same question to Open Tution Ai it mentioned “KAM do constitute a modification of report”.Short answer – no.
Since the revision of the reporting ISAs (in 2016) , there is no such thing as a “modified REPORT” – the term “modification” applies only opinions. The KAM section is an examples of an additional para which may be included in a report (is required for a listed entity) which does not affect the audit opinion.
I don’t know how you posed the question to AI – but it’s certainly not infallible – or I would be out of a job? 🙂
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