g time spent or specialised skills required Communication Matters that require

G time spent or specialised skills required

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Effort required to audit a specific area (e.g. time spent or specialised skills required) Communication Matters that require significant auditor attention may also result in significant interaction with those charged with governance during the audit (e.g. a significant transaction that is outside the normal course of the business of the entity) Consultation Matters requiring consultation with others internally within the firm or outside the firm Issues identified during the audit Misstatements related to a matter or areas affected by a significant control deficiency or breakdown Presenting key audit matters in the auditor’s report Key audit matters are presented in the auditor’s report under a separate section titled ‘Key audit matters’. The description of a key audit matter is intended to provide a clear and succinct explanation to the users of the financial statements to enable them to understand why the matter was significant in the audit and how it was addressed. In describing how the matter was addressed, the auditor may, for example, provide a brief overview of the procedures performed or key observations. The description should also refer to the related disclosure in the financial statements (if any). Common matters that have been reported in practice relate to revenue recognition, goodwill impairment, provisions and asset valuations. The order of presentation of individual matters is a matter of professional judgement. For example, information may be ordered by relative importance or it may correspond to the order in which matters are disclosed in the financial statements. Key audit matters The following is an example of a key audit matters paragraph: Impairment of goodwill Refer to C7 ‘Intangible assets’. At 30 June 2015 the Group’s balance sheet includes goodwill amounting to $781.7 million, contained within six cash generating units (CGUs). The assessment of impairment of the Group’s goodwill balances incorporated significant judgement in respect of factors such as discount rates, current work in hand and future contract wins, as well as economic assumptions such as, inflation and foreign currency rates. The sectors in which the Group operated over the period have experienced the impacts of reductions in capital expenditure, constrained government spending, costs reduction mandates, project cancellations and deferrals, along with volatile commodity prices. A key audit matter for us was whether the Group’s value in use model for impairment included appropriate consideration of these factors on their significant estimates and judgements and the selection of key external and internal inputs. Our procedures included, amongst others: x We assessed management’s determination of the Group’s CGUs based on our understanding of the nature of the Group’s business and the economic environment in which the segments operate. We also analysed the internal reporting of the Group to assess how earnings streams are monitored and reported; x We evaluated management’s process regarding valuation of the Group’s goodwill assets to determine any asset impairments.
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