Audit and Assurance Practice Exam 2026 – The Complete All-in-One Guide for Exam Success!

Audit reports under International Standards on Auditing (ISA) 701 do not require Key Audit Matters (KAMs) to be included in all cases. This standard applies specifically to listed entities and mandates the inclusion of KAMs when the auditor determines that such matters are of significance in the audit. Factors such as the complexity of the entity, the nature of its operations, or particular concerns raised during the audit might necessitate the inclusion of KAMs.

However, for entities that do not meet specific criteria (for example, smaller companies not listed on stock exchanges), the inclusion of KAMs is not obligatory, and therefore, audit reports for those entities may not contain any KAMs. The requirement is aimed more at enhancing transparency in reports for users who may be concerned with the risks and issues associated with larger or more complex organizations.

This criterion helps to ensure that the reports remain relevant to the stakeholders while not imposing unnecessary burden on auditors for smaller or simpler entities.