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I read the notes and read the article on ACCAs site. I still cant properly understand what KAM are.
Could you kindly provide some examples of what would go under the KAM section?
Also, an example to differentiate it with the emphasis of matter paragraph
Key audit matter is bring intention of user of financial statement.
Emphasis matter is attention only to shareholder.
If I’m wrong , please correct to me .
ThxYou are wrong. Both appear or can appear in the Audit report, which is addressed to members (shareholders).
I can’t add much more about KAMs than is covered in the article (https://www.accaglobal.com/uk/en/student/exam-support-resources/fundamentals-exams-study-resources/f8/technical-articles/auditor-report.html). As it say:
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’ …
Significant auditor judgments in relation to areas of the financial statements that involved significant management judgment. …
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.
Just think of KAM as the areas where the auditors might lose sleep eg difficult valuations of inventory or difficult assessments about whether non-current assets should be impaired.
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