Original Research
ISA 701: Key Audit Matters - An exploration of the rationale and possible unintended consequences in a South African
Journal of Economic and Financial Sciences | Vol 10, No 2 | a22 |
DOI: https://doi.org/10.4102/jef.v10i2.22
| © 2017 Milton Segal
| This work is licensed under CC Attribution 4.0
Submitted: 06 December 2017 | Published: 06 November 2017
Submitted: 06 December 2017 | Published: 06 November 2017
About the author(s)
Milton Segal, University of the Witwatersrand, South AfricaFull Text:
PDF (273KB)Abstract
The New International Standard of Auditing (ISA) statement number 701 titled key audit matters (KAM) has been reported as one of the most significant changes to the audit profession and the manner in which audit reports are to be delivered. Effective from 15 December 2016, auditors for Johannesburg Stock Exchange (JSE) -listed companies will need to disclose key and significant transactions that occurred on the audit, even in the event of an unmodified audit opinion. The legislators describe this as increasing transparency and accountability to enhance the fairness of reporting and to assist the stakeholders with understanding the audited annual financial statements. This paper uses a detailed content analysis of prior academic and professional audit literature to explore possible unintended consequences, uncertainties and risks of the KAM. These include disclosure of potential confidential information and potentially increased auditor
Keywords
Key audit matters; transparency; auditor liability; unintended consequences; relevance; disclosure
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