Audit and Assurance Alert: CAS 701 Key Audit Matters

This Audit and Assurance Alert was originally published in May 2017 and has been updated in December 2018 to address the change in scope of when key audit matters are to be identified. 

Topics in this alert include:
• what key audit matters are;
• when to communicate key audit matters;
• how to determine key audit matters; and
• how to communicate and describe key audit matters.

CAS 701 applies to audits of complete sets of general purpose financial statements when either the auditor decides to communicate key audit matters in the auditor's report or when the auditor is required by law or regulation to communicate key audit matters in the auditor's report.  These revisions are effective for audits of financial statements for periods ending on or after December 15, 2018.

For periods ending on or after December 15, 2020, key audit matters are to be communicated for audits of complete sets of general purpose financial statements of entities listed on the Toronto Stock Exchange (TSE), other than entities required to comply with National Instrument 81-106, Investment Fund Continuous Disclosure.

Subsequent related exposure draft
In January 2019, the Auditing and Assurance Standards Board issued an exposure draft to revise CAS 700, Forming an Opinion and Reporting on Financial Statements, relating to the communication of key audit matters in the auditor’s report.

The Board proposes to expand the requirements for auditors to communicate key audit matters  for audits of complete sets of general purpose financial statements so that they apply to:

• all entities listed on the TSX, TSXV, NEO and CSE; and
• all entities required to comply with NI 81-106.

The Board also proposes a staged implementation of these reporting requirements. This exposure draft is open for comments until May 15, 2019.

Audit and Assurance Alert: CAS 701 Key Audit Matters