Auditor's reports - part 3

In this lesson

1. 0:00 Key audit matters for listed entities
2. 0:51 Marks and Spencer store closure example
3. 2:03 Common areas for key audit matters
4. 3:10 Emphasis of matter paragraphs explained
5. 4:16 Emphasis of matter real-world examples
6. 5:56 Reading other information in annual reports
7. 7:07 Handling material inconsistencies with management
8. 7:59 Other matter paragraphs in audit reports
9. 9:07 Revenue recognition materiality worked example
10. 11:09 Considering wider audit implications

About this lesson

This lesson focuses on what matters auditors must highlight for listed entities, when and how to modify audit opinions, and how to identify material misstatements in complex scenarios. Understanding these reporting requirements is essential for the AA (Audit and Assurance) paper, as auditors must clearly communicate risks, judgements, and inconsistencies to users of financial statements. The video walks through real-world examples, including how Marks and Spencer disclosed store closure impairments as a key audit matter, and how the Volkswagen diesel issue was communicated through an emphasis of matter paragraph. You'll explore the distinction between properly disclosed matters that need highlighting versus inadequate disclosures that require opinion modification. The lesson also covers how to read through other information in annual reports to identify material inconsistencies with the financial statements, and when to escalate concerns to those charged with governance. A practical worked example demonstrates how to calculate materiality and determine the appropriate audit opinion when revenue recognition is misstated. You'll learn to quantify errors, assess whether they're isolated or pervasive, and decide between qualified opinions and adverse opinions. The lesson emphasises considering the wider implications of identified issues across multiple contracts and prior years, ensuring your audit conclusions reflect the full scope of potential problems in the financial statements.

Duration: 12m