[4.0000] About KAM International 2011
[4.0500] Introduction
[4.0505] This KAM topic provides information about KAM International (KAM), including effective date, relevant professional
standards, organization and presentation, applicability in relation to subsequently released materials and other KPMG
manuals, and local requirements and guidance.
[4.0510] KAM is structured by topic, individually referred to as "KAM topic(s)" and listed in alphabetical order on ALex. As
described in this KAM topic, KAM topics include:
[4.0515] Each KAM topic has a unique topic number with sequential paragraph numbers for ease of reading and referring to
KAM (refer to the example below). KAM topic numbers are not meant to indicate the sequential order of KAM or of KPMG's
audit methodology.
[4.0535] KAM topics are written in the context of an audit of financial statements, presuming that such financial statements
are prepared in accordance with a financial reporting framework designed to meet the common financial information needs
of a wide range of users (i.e. "general purpose financial statements"). KAM topics are also relevant for an audit of financial
information prepared for consolidation purposes. [Source: ISA 200.2; Source: ISA 200.A4]
[4.0536] KAM topics include, as relevant, requirements and guidance regarding integrated audits performed in accordance
with the Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 5, An Audit of Internal Control Over
Financial Reporting That Is Integrated with An Audit of Financial Statements. Refer to the section in this KAM topic beginning
at KAM 4.1260ia1 for additional information regarding integrated audits performed in accordance with PCAOB Auditing
Standard No. 5, including information regarding the applicability of these requirements and guidance.
[4.0537] Requirements and guidance specific to integrated audits are presented using "ia" at the end of KAM paragraph
numbers as depicted below.
[4.0538] In addition to identifying the requirements and guidance regarding integrated audits by including a unique
paragraph number in the KAM topics, these requirements and guidance are also identified by gray shading.
[4.0539] Engagements teams who perform an integrated audit can access the relevant content by clicking links in the
relevant sections of KAM topics as shown below:
+ Click here for content specific to integrated audits performed in accordance with PCAOB Auditing Standard No.
5.
[4.0540] KAM topics do not address our responsibilities that may exist in legislation, regulation or otherwise in connection
with, for example, the offering of securities to the public. Such responsibilities may differ from those established in the KAM
topics. Accordingly, while we may find aspects of the KAM topics helpful in such circumstances, it is our responsibility to
ensure compliance with all relevant legal, regulatory or professional obligations. [Source: ISA 200.2; Source: ISA 200.A4]
[4.1000] Effective date
[4.1005] This version of KAM is effective for audits of financial statements for periods ending on or after December 14, 2011
and/or engagement teams using eAudIT 2011 or the 2011 Transitional Paper-based Audit (TPAs) except for the KAM topics
titled, "IFRS engagements" and "U.S. GAAP and U.S. auditing standards engagements" which are effective upon issuance of
this version of KAM.
[4.1010] Relevant professional standards
[4.1011] Performance of an audit in accordance with KAM provides for compliance with ISAs and KPMG requirements.
[4.1015] This version of KAM is based on the ISAs relevant to the performance of audits of general purpose financial
statements for periods ending on or after December 14, 2010.
[4.1020] Excluded from the KAM topics are:
[4.1025] The International Standards Reports Manual (ISRM) is the companion manual to KAM. It builds on the
requirements and guidance in KAM.
[4.1026] The ISRM contains requirements and guidance for reporting on:
[4.1027] The ISRM also contains requirements and guidance for inter-office and inter-firm reporting on financial information
of a component prepared for consolidation purposes.
[4.1040] Organization and presentation of KAM topics
[4.1045] Objectives
[4.1050] KAM topics include objectives, which primarily include the objectives of the ISAs that are most relevant to that KAM
topic. Objectives provide a link between the requirements of the KAM topic and our overall objectives, which are
to: [Source: ISA 200.11; Source: ISA 200.A67]
[4.1051] Refer to the KAM topic titled, "General principles and responsibilities" for further discussion about the importance of
objectives and the relationships among objectives, requirements and guidance.
[4.1055] Introductions
[4.1060] KAM topics generally include an Introduction section, which describes some of the more fundamental concepts
related to the KAM topic and provides context relevant to a proper understanding of the KAM topic. [Source: ISA 200.A58]
[4.1065] Introductions within KAM topics may include: [Source: ISA 200.A61]
[4.1070] Requirements
[4.1075] To distinguish requirements from guidance in the KAM topics, requirements are presented within a bold, blue
bordered "R" box (refer to the example below) and contain the word "shall".
[4.1080] In some instances, requirements mentioned in one KAM topic are related to requirements more fully described in
another KAM topic. These "related requirements" are presented within a bold blue bordered "Related R" box (refer to
the example below), referencing users to the KAM topic where the requirement is more fully described.
[4.1081] Requirements and guidance within KAM topics reflect the following sourcing conventions, presented after each KAM
paragraph, to denote the source of content and whether the content is taken directly from the ISAs or is derived from the
ISAs:
[4.1085] Guidance
[4.1090] In addition to objectives and requirements, KAM topics contain related application guidance that provides context
relevant to a proper understanding of the KAM topic. This includes guidance from the ISAs as well as guidance developed by
KPMG. The entire text of a KAM topic, therefore, is relevant to an understanding of the objectives and the proper application
of the requirements. [Source: ISA 200.A58]
[4.1091] KAM is consistent with the Code of Ethics issued by the International Federation of Accountants (IFAC), and is
consistent with International Standards on Quality Control (ISQCs).
[4.1095] Where necessary, application guidance provides further explanation of requirements and guidance for carrying
them out. In particular, it may: [Source: ISA 200.A59]
[4.1100] While such application guidance does not in itself impose requirements, it is relevant to the proper application of
requirements and may also provide background information on matters addressed in the KAM topic. [Source: ISA 200.A59]
[4.1105] Appendices and/or hyperlinks to ISAs form part of the application guidance within KAM topics. The purpose and
intended use of appendices and/or hyperlinks to ISAs are explained in the body of the related KAM topics or within the
appendices and/or hyperlinks to ISAs. [Source: ISA 200.A60]
[4.1110] The requirements and application guidance in KAM topics are of a general nature and are not intended necessarily
to address the specific circumstances of any particular entity. Due to the nature of such requirements and application
guidance, it is ultimately the judgment of the engagement partner and the engagement team to determine, in the
circumstances of each particular audit engagement, the manner in which each requirement is implemented.
[4.1120] Definitions of terms
[4.1125] KAM topics generally include a description of the meanings attributed to certain relevant terms in a separate
section in the KAM topic under the heading "Definitions". [Source: ISA 200.A62]
[4.1130] Definitions are provided to assist with the consistent application and interpretation of terms used throughout the
KAM topics, and are not intended to override definitions that may be established for other purposes, whether in law,
regulation or otherwise. Unless otherwise indicated, defined terms will carry the same meanings throughout the KAM topics.
[Source: ISA 200.A62]
[4.1135] Reference material
[4.1140] In a separate section at the end of each KAM topic, a listing of reference material that relates to the KAM topic is
provided, which may include professional standards and other material, such as relevant references to IS Alerts, KAM Alerts
or other firm manuals. These listings of reference material are not intended to be all inclusive.
[4.1155] Relationship between KAM topics and eAudIT
[4.1160] Two conventions are used within KAM topics to assist engagement teams in understanding the relationship
between individual KAM topics and eAudIT:
1. Parenthetical references
Parenthetical references to the eAudIT activity or activities to which the KAM topic relates are included in the
headers or paragraphs of KAM topics.
2. eAudIT roadmaps
eAudIT roadmaps are included within KAM topics to depict the eAudIT activity or activities to which the KAM topic
relates, highlighted in orange in the example below. (refer to endnote 3)
[4.1165] Relationship between KAM topics and the Transitional Paper-Based Audit (TPAs)
[4.1170] For those engagement teams using the TPAs, references in KAM topics to the eAudIT Tracker are not relevant, as
the eAudIT Tracker does not exist in the TPAs. As the TPA activity numbers are consistent with eAudIT activity numbers, the
relationship to eAudIT described above is also relevant for the TPAs.
[4.1175] To the extent KAM topics direct us to document certain information in the eAudIT Tracker, engagement teams
using the TPAs should follow the instructions in the TPAs as to where such information should be included in the audit
documentation.
[4.1190] Applicability in relation to subsequently released materials
[4.1200] KAM Alerts address revisions to ISAs, International Standards on Review Engagements (ISREs) and/or KPMG
requirements and guidance that have a direct effect on KAM and are effective between its releases. KAM Alerts may also be
issued to provide clarification on certain KAM requirements and guidance.
[4.1205] KAM topics expand on those requirements and guidance within the eAudIT i-buttons. To the extent there are
differences between a KAM topic and an eAudIT i-button, the content in the KAM topic prevails.
[4.1210] Applicability in relation to other KPMG manuals
[4.1215] KAM topics make reference to the Global Quality and Risk Management Manual (GQ&RMM) released in October
2010, which supplements the requirements and guidance within KAM topics.
[4.1220] The GQ&RMM provides KPMG member firms and KPMG personnel with policies, practices, and procedures to
facilitate the management of risk.
[4.1230] In the event that any provisions of the KAM topics or the GQ&RMM are determined to violate any applicable laws or
professional standards, the applicable laws or professional standards prevail.
[4.1245] Local requirements and guidance
[4.1255] Individual KPMG member firms may add local requirements and/or guidance to comply with additional professional,
legal or regulatory requirements, for example, to assist in applying requirements adopted locally in addition to the
requirements of KAM.
[4.1260] Requirements and/or guidance added by an individual KPMG member firm is separately identified by a country code
within the KAM locator number.
[4.1260ia1] Integrated audits performed in accordance with PCAOB Auditing Standard No. 5
[4.1260ia2] KAM topics include, where relevant, requirements and application guidance of the PCAOB Auditing Standard No.
5 and requirements and guidance developed by KPMG as relevant for integrated audits. These requirements and guidance
are applicable when performing an audit of the effectiveness of internal control over financial reporting (ICOFR) that is
integrated with an audit of the financial statements (integrated audit) in accordance with PCAOB Auditing Standard No. 5.
[4.1260ia3] While the requirements and guidance of PCAOB Auditing Standard No. 5 are applicable only to integrated audits,
we may apply certain aspects of this content in financial statements audits, if considered relevant based on our professional
judgment.
[4.1260ia4] The KAM topics do not address requirements and guidance regarding engagements performed in accordance
with PCAOB Auditing Standard No. 4, Reporting on Whether a Previously Reported Material Weakness Continues to Exist.
For requirements and guidance regarding engagements performed pursuant to this standard, refer to the KAM-US topic
titled, "PCAOB Auditing Standard No. 4 engagements" on ALex under the United States country page.
[4.1260ia5] Effective date of integrated audit content
[4.1260ia6] This version of KAM is effective for integrated audits for periods ending on or after December 14, 2011 and/or
engagement teams using eAudIT 2011 or the 2011 TPAs.
[4.1260ia7] Organization and presentation of integrated audit content in KAM
[4.1260ia8] Objectives specific to audits of ICOFR in relevant KAM topics provide a connection between the requirements of
the KAM topic and our overall objective of the audit of ICOFR, which is to express an opinion on the effectiveness of the
entity's ICOFR.
[4.1260ia9] Requirements of PCAOB Auditing Standard No. 5 within KAM topics reflect the following sourcing conventions,
presented after each KAM requirement paragraph, to denote the source of content and whether the content is taken directly
from the PCAOB Auditing Standard No. 5 or is derived from the PCAOB Auditing Standard No. 5:
[4.1260ia10] KAM topics also contain related application guidance from the PCAOB Auditing Standard No. 5 and guidance
developed by KPMG that provides context relevant to a proper understanding of the KAM topic for integrated audits.
[4.1260ia11] Applicability of integrated audit content to other KPMG manuals
[4.1260ia12] KAM topics make reference to Chapter 44 of the U.S. Reports Manual, which supplements the requirements
and guidance within KAM topics for audits of ICOFR.
[4.1260ia13] In the event of a conflict related to the audit of ICOFR between the U.S. Reports Manual and the KAM topics,
the U.S. Reports Manual prevails if the conflict relates to reporting matters.
[4.1260ia14] The KAM topics prevail if the conflicts relate to any matter other than those described in KAM 4.1260ia13.
[4.6000] Definitions
[4.8000] Reference material
Endnotes
1. Requirements and guidance are presented verbatim from the ISAs, except for where the ISAs use the term "the auditor",
KAM topics use "we", "our", "us", "engagement team" and other related terms.
2. In certain instances, ISA requirements and guidance are not presented verbatim in KAM. These instances do not reduce
or eliminate the ISA requirements.
3. Certain eAudIT roadmaps within KAM topics also include eAudIT activities that are specific to the integrated audit
workflow, when relevant. For example, integrated audit specific eAudIT activities that relate to entity level controls have
been included as part of eAudIT roadmaps in relevant KAM topics.
[4.0005] Topic sections
• Introduction
• Effective date
• Relevant professional standards
• Organization and presentation of KAM topics
- Objectives
- Introductions
- Requirements
- Guidance
- Definitions of terms
- Reference material
- Relationship between KAM topics and eAudIT
- Relationship between KAM topics and the Transitional Paper-Based Audit (TPAs)
• Applicability in relation to subsequently released materials
• Applicability in relation to other KPMG manuals
• Local requirements and guidance
• Integrated audits performed in accordance with PCAOB Auditing Standard No. 5
• Definitions
• Reference material
• requirements and application guidance of the International Standards on Auditing (ISAs)
• requirements and guidance developed by KPMG.
R
[4.0530] KAM topics are confidential and proprietary, are solely for use within KPMG member firms and
shall not be shared by engagement teams with anyone outside KPMG member firms, including clients.
• guidance relating to considerations specific to public sector entities
• requirements and guidance specific to compliance frameworks
• ISA 800, Special Considerations - Audits of Financial Statements Prepared in Accordance with
Special Purpose Financial Statements
• ISA 805, Special Considerations - Audits of Single Financial Statements and Specific Elements,
Accounts or Items of a Financial Statement
• ISA 810, Engagements to Report on Summary Financial Statements.
• audits of general purpose financial statements conducted in accordance the ISAs
• reviews of interim financial information or other historical financial information of an audit client
conducted in accordance with ISRE 2410, Review of Interim Financial Information Performed by the
Independent Auditor of the Entity.
a. obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, thereby enabling us to express an opinion on
whether the financial statements are prepared, in all material respects, in accordance with an
applicable financial reporting framework; and [ISA 200.11]
b. to report on the financial statements, and communicate as required, in accordance with our findings.
[Source: ISA 200.11]
• the purpose and scope of the KAM topic, including how the KAM topic and related ISAs relate to
other KAM topics and ISAs [Source: ISA 200.A61]
• the subject matter of the KAM topic [Source: ISA 200.A61]
• our responsibilities in relation to the subject matter of the KAM topic [Source: ISA 200.A61]
• the context in which the KAM topic is set. [Source: ISA 200.A61]
R
Related
R
Directly from the ISAs (refer to endnote 1) [ISA XXX.YY]
Derived from the ISAs (refer to endnote 2) [Source: ISA XXX.YY]
Developed or adopted by KPMG as relevant for all audits of financial
statements
No reference
Related
R
[4.1082] In accordance with ISA 200.22 (addressed in the KAM topic titled, "General principles and
responsibilities"), we shall comply with each requirement set forth in the KAM topics, unless in the
circumstances of the audit, the entire KAM topic is not relevant or the requirement is not relevant because
it is conditional and the condition does not exist. [Source: ISA 200.22]
• explain more precisely what a requirement means or is intended to cover [ISA 200.A59]
• include examples of procedures that may be appropriate in the circumstances. [ISA 200.A59]
R
[4.1195] Users of the KAM topics shall take into consideration any subsequently issued authoritative
literature and/or any subsequent modifications or revisions of any other sources, including KAM Alerts and
IS Alerts, that may affect KAM or that may be referred to in the KAM topics.
R
[4.1250] Any deviation by individual KPMG member firms from the requirements of KAM topics, including
ethical requirements, shall be approved by the Global Vice Chairman - Risk and Compliance and by the
Global Head of Audit.
Directly from the PCAOB Auditing Standard No. 5 [AS 5.YY]
Derived from the PCAOB Auditing Standard No. 5 [Source: AS 5.YY]
Developed or adopted by KPMG as relevant for integrated audits No reference
Financial statements [4.6005] Financial statements are a structured representation of historical financial
information, including related notes, intended to communicate an entity's economic
resources or obligations at a point in time or the changes therein for a period of time in
accordance with a financial reporting framework
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