Audit and Assurance Practice Exam

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Does ISA 701 mandate the order of presentation of KAMs?

Yes, it mandates the order of KAM presentation.
No, the auditor can choose the order.
Only for certain types of audits.
Yes, but only for financial audits.

The correct answer is: No, the auditor can choose the order.

International Standard on Auditing (ISA) 701 addresses the communication of Key Audit Matters (KAMs) in the auditor's report for audits of financial statements. One of the key features of ISA 701 is that it provides auditors with the flexibility to select and present KAMs based on their significance and relevance to the audit conducted. This means that while the standard requires the auditor to identify and communicate KAMs, it does not mandate a specific order for their presentation. Auditors can organize KAMs in a way that they believe best reflects the circumstances of the audit and the nature of the matters themselves. This flexibility allows for a more tailored and contextual presentation that can enhance the understanding of users of the financial statements. The other options imply a restriction or requirement concerning the order of KAM presentation, which is not supported by the standards set forth in ISA 701. Therefore, the answer indicating that the auditor can choose the order aligns with the principles of ISA 701 and the intention behind it to promote clarity and relevance in reporting KAMs.