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IRBA draws attention to the Key Audit Matters in auditor's reports as it relates to COVID-19
- 10 June 2020
- Accounting
- South African Accounting Academy
KAMs are defined as those matters that, in the auditor’s professional judgement, were of most significance in the audit of the financial statements of the current period and are selected from matters communicated to those charged with governance.
They are those matters on which the auditor spends significant time during the audit and believes are sufficiently important to draw to the attention of users of the financial statements and communicate in the auditor’s report. To be useful to the reader, auditors differentiate the value add of their services by providing sufficient information in the auditor’s report which pertains to KAMs, to enable the user to better understand the specific challenges which the auditor encountered during the audit, and how the auditor adapted their audit procedures to respond to those challenges.
The COVID-19 pandemic presents a unique set of circumstances and challenges to the financial reporting chain, which preparers and those charged with governance must ensure are sufficiently disclosed in the financial statements. In response, if the matter meets the definition of a KAM, the auditor’s report should also indicate how the auditor addressed these challenges, which might include how the auditor addressed the additional audit risks presented by, for example, valuations, accounting estimates and events which occurred after the financial reporting date.
Preparers and auditors are encouraged to communicate useful information in the financial statement disclosures and the auditor’s report, respectively, and investors and other users are encouraged to carefully consider this information in arriving at economic decisions about the company.
Click here to access the press release.