Psa 70031 when the auditor is otherwise required by

PSA 700.31
When the auditor is otherwise required by law or regulation or decides to communicate key
audit matters in the auditor’s report, the auditor shall do so in accordance with PSA 701.
500.15 KAM is defined as those matters that, in the auditor’s professional judgment, were of
most significance in the audit of the financial statements of the current period. KAM are
selected from matters communicated with TCWG. [PSA 701.8]
500.16 The purpose of communicating key audit matters is to:
▪ Enhance the communicative value of the auditor's report by providing greater
transparency about the audit that was performed; and
▪ Provide additional entity-specific information to intended users of the financial
statements to assist them in understanding those matters that, in the auditor's
professional judgment, were of most significance in the audit of the financial
statements of the current period.
500.17 Communicating KAM in complete sets of general-purpose financial statements is
▪ Mandatory for…
o Listed entities.
o Auditors who may voluntarily, or at the request of management or TCWG,
communicate KAM in the auditor’s report for any type of entity.
▪ Voluntary for…
o Auditors who may voluntarily, or at the request of management or TCWG,
com municate KAM in the auditor’s report for any type of entity.
o SMEs who want to be seen as similar to listed entities or are considering applying
to be listed on a recognized exchange.
As the public and other stakeholders becomes familiar with KAM disclosures, such as
in the audit reports of listed entities, it may become expected in the audit reports of
SMEs.
▪ Not permitted…
o As a substitute for required disclosures in the financial statements.

Audit Report 500 – 6
o As a substitute for reporting a material uncertainty in accordance with PSA 570
that
o may cast significant doubt on the entity's ability to continue as a going concern.
o As a separate audit opinion on individual matters.
o As a substitute for expressing a modified opinion required in accordance with PSA
705 (Revised).
o When the auditor disclaims an opinion on the financial statements.
(IFAC Guide, Vol. I, Fourth Edition, page 215)
500.18 The description of individual matters in the auditor’s report and how the matter was
addressed in the audit includes the following:
▪ Describe each KAM
o Why the matter was considered to be a KAM.
o How the matter was addressed in the audit.
o Reference to the related financial statement disclosure(s), if any.
▪ Describe how each matter was addressed in the audit
o Aspects of the auditor’s response or approach that were most relevant to the
matter or specific to the assessed risk of material misstatement.
o Brief overview of procedures performed.
o Indication of the outcome of the auditor’s procedures .
o Key observations with respect to the matter.