This ISA defines the auditor’s responsibility related to communicating key audit matters identified during the audit of a business financial statement. The purpose of this ISA is to enhance the audit report’s communicative value.
It’s the auditor’s responsibility to identify the most judgmental and significant audit matters and communicate them in the audit report.
Communicating key audit matters does not relieve management from their responsibility to disclose a modified opinion when needed, report when material uncertainty exists, and provide a separate opinion on individual matters.
Requirements of ISA 715
This ISA requires determining and communicating the key audit matters in the report.
Determination—The auditor shall determine matters to be communicated based on significant risk, judgments (accounting estimates & uncertainty), and significant events that occurred during the auditing of the financial statement.
Communication – The auditor must describe key matters using appropriate sub-headings in the context of audited financial statements.
Key Audit Matters Not a Substitute for Expressing a Modified Opinion
The auditor shall not communicate key audit matters when modifying the audit opinion.
Description of Individual Key Audit Matters
The key audit matter should include why a given matter was considered the most significant and how it was addressed during the audit.
Circumstances in Which a Matter Determined to Be a Key Audit Matter Is Not Communicated in the Auditor’s Report
- When the law prohibits public disclosure.
- Communication of the matter is expected to create adverse consequences, and such information outweighs the public’s benefits.
Interaction between Descriptions of Key Audit Matters and Other Elements Required to Be Included in the Auditor’s Report
Based on the modifying audit opinion, material uncertainty about going concern is a key audit matter by nature. However, these matters will be communicated as per applicable ISAs, and their reference will be included in the key audit matter section of the audit report.
Daniyal Khatri, ACCA, is a seasoned bookkeeping specialist with over a decade of experience in designing precise, compliant financial systems. His expertise spans daily transaction tracking, ledger management, and financial record accuracy, ensuring businesses maintain organized, audit-ready books. Daniyal excels at aligning processes with evolving compliance standards, integrating user-friendly tools to automate workflows, and translating regulatory complexities into actionable steps. By combining technical proficiency with a focus on clarity, he empowers organizations to achieve error-free bookkeeping, minimize risk, and build a foundation for informed financial decisions.
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