REPORTING- SUMMARY – KASHIF KAMRAN –FCCA ( P7 JUNE 2018 EXAMS)
GOING CONCERN KAM
Listed/ Non listed: Conditions for KAM
Co is a GC + MU exist 1. Listed company
1. Disclosed (Para- 2. Matter is significant
MuRGC) 3. Positive/ correct
2. Not KAM should be given precedence over
disclosed(Modify EOMP /OMP as KAM provide
the opinion) additional information to shareholder
Listed: KAM-matters to include , risky areas,
Co is a GC + There are subjective areas, major events or
doubts but no MU exist transaction arising during audit
(Include the doubts in
KAM)
When writing KAM- the auditor
should inform shareholder:
1. Why the matter was
considered as significant
2. How it was addressed during
audit?
OTHER INFORMATION PARA
Other information is the annual
report like, the chairman statement,
director report, key performing
indicators etc, are important other
information which the audit should
carefully read to ensure that the
other information is consistent with
the information presented in FS.
Based upon reading of the other
information the auditor can
conclude:
1. There is no inconsistency
between other info and FS/
thus there is nothing to
report ( the auditor will
highlight there is nothing to
report in OIP)
2. There is a material
inconsistency between other
information and FS/ so
describing the material
inconsistency ( the material
inconsistency will be
included in OIP)
Thus OIP – basically would come in
both case, whether there is nothing
to report / or there is a material
inconsistency
EOMP
The EOMP matter can only be
included in the audit report
when the following TWO
conditions are met( Both of
them/ not any one)
1. The matter is material
AND
2. It is correctly
disclosed in notes to
FS
Note 1: In the case of listed
company if both these
condition are adhered, the
auditor will give KAM
precedence over EOMP as
KAM will provide additional
information beyond which is
provided in EOMP
Note 2: However, the same 2
situation given above, if the
case is non-listed will be
included in EOMP.
OMP
The OMP is included in
the audit report for:
1. Change of
auditor
2. National
requirement /
local
requirement
Again in the case of non-
listed company the
auditor will include
OMP for the above
condition
However in the case of
listed company, the
auditor can consider
putting the ABOVE
conditions in KAM , so
to provide additional
information to
shareholder beyond
which is provided by
OMP.
 OPINION QUALIFIED OPINION ADVERSE DISCLAIMER
ISSUE FS are misstated Auditor is unable to obtain FS are misstated Auditor is unable to obtain
evidence evidence
SCALE MATERIAL MATERIAL and PERVASIVE
PBT 5-10% and thereafter Substantial proportion (exceeding 60%)
TOTAL ASSETS 1-2% and thereafter Substantial proportion (exceeding 60%)
REVENUE ½ % and there after Substantial proportion (exceeding 60%)

Note:
Individual misstatement – and its impact on audit report (Individual misstatement can be Material and pervasive, Material, immaterial or trivial)
Impact on report ( in general carry 3 marks)

 Issue – define what is the issue

 Scale- determine and comment on whether it is material and pervasive/ material / immaterial / trivial
 Opinion- Determine the right opinion
Aggregate misstatement – and its impact on audit report (Aggregate misstatement can be Material and pervasive, Material, immaterial or trivial)
Impact on report ( in general carry 2 marks)

 Scale – aggregate scale( NET misstatements)/ determine and comment whether is material and pervasive/ material / immaterial / trivial
 Opinion- determine the right opinion
Some default pervasive matters
1. Management refuse to provide a written representation
2. MU relating to going concern (exist) but has not been disclosed in notes