SA 701 Chart 1

Name Meaning of KAM Why? Purpose of KAM

Communicating KAM In Independent Auditor’s Report Matters Communicative Value Additional Information Entity & Areas of significant Engage with Management and
!! !! management judgement TCWG

That in Auditor’s Professional Selected from Matters Provide greater transparency To intended users of FS
Judgement about audit Assist the intended users Intended users will get basis

Communicated to TCWG To assist them

WERE OF MOST To understand the to further engage
SIGNIFICANCE

Matters
Entity Areas of significant With Mgt. and TCWG
In an AOFS management judgement

that WERE OF MOST

SIGNIFICANCE About

In an AOFS Certain matters related to Audited FS Audit that was performed

entity
 SA 701 Chart 2

Applicability & Prohibition Objective of Auditor Determining KAM

Applicability Prohibition Determine KAM Communicate KAM Auditor shall determine Factors to be considered while
determining KAMs

Listed entities Auditor decides To Communicate Required by L&R When Auditor disclaims an In A’s Report From Those
KAM in A’s R. opinion on FS 315 Significant Mgt. Judgement Significant events and
!! transaction

Matters communicated with Matters

Unless required by L&R TCWG
That require significant auditor
attention in performing the
audit
Areas of Higher assessed Significant Risk areas in the financial
ROMM statements The effect on the audit of
significant events or
transactions that occurred
during the period.
that involved significant
management judgment,

In other words matters that

WERE OF MOST including accounting estimates
SIGNIFICANCE in an
AOFS

that have been identified as

having high
estimation uncertainty.
 SA 701 Chart 3

Communication

Communicating KAM Description Not a Substitute for Disclosure KAM is not Communicated in Other points related to Communication if NO KAM or
in Financial Statements etc Auditor’s Report communication KAMs to communicated are as
per 705 and 570 only

HOW Language of KAM Section Ref to related disclosure And Summary

disclosure Modified opinion Reporting as per SA 570 Separate opinion on individual Law or regulation prohibits Adverse consequences > Public KAM by Nature KAM by nature shall not be
matters interest benefits described in KAM section auditor shall include a
statement to this effect in a
separate section of the
Auditor shall Shall state that if any Why Matter was considered to How matter was addressed in 3 points
auditor’s report under the
be of the audit When MU Exist Public disclosure Matters giving rise to modified MU
heading “Key Audit
In extremely rare Shall not applicable if entity opinion in accordance with SA Report on these matters in Matters
circumstances, the auditor has publicly disclosed 705 (Revised) accordance with applicable SA’s
determines that information about the matter
Describe Using Under the KAM are those matters Matters were addressed in the in FS Disclosure Why How
context of MOST SIGNIFICANCE Relating to events or conditions of that matter Related to events and condition

Include a ref in KAM section

Each Key Audit Matter Using an appropriate sub
heading
“Key Audit Matters”
Adverse consequences > Public
Heading That in Auditor’s Professional In FS (if any) Considered as KAM Addressed
interest benefits
Judgement AOFS and forming an opinion In audit That may cast significant doubt that may cast
about entity’s ability to
continue as a going concern Basis of qualified / adverse MU Related to Going Concern
opinion
WERE OF MOST And and therefore determined to be significant doubt on the
SIGNIFICANCE KAM

the auditor does not provide a Entity’s ability to continue as

In an AOFS separate opinion on these GOING CONCERN
matters

in accordance with SA 570