Lesson: Critical Audit Matters and Key Audit Matters

In this lesson, the focus is on understanding critical audit matters and key audit matters. Critical audit matters are those issues arising from the current period audit of financial statements that require communication with the audit committee due to their materiality and complexity. The communication of critical audit matters does not alter the opinion on the financial statements nor provide separate opinions on the accounts or disclosures related to those matters. Key audit matters, on the other hand, are matters that were of most significance during the audit and also require communication with those charged with governance. The lesson emphasizes that the communication of key audit matters does not serve as a substitute for necessary disclosures, a modified opinion, or determining an entity's ability to continue as a going concern. Additionally, the lesson covers the circumstances under which the auditor communicates key audit matters in the audit report.