{"id":834,"date":"2019-05-29T14:26:44","date_gmt":"2019-05-29T12:26:44","guid":{"rendered":"https:\/\/eaa-online.org\/arc\/blog\/blog\/when-cash-key\/"},"modified":"2019-05-29T14:26:44","modified_gmt":"2019-05-29T12:26:44","slug":"when-cash-key","status":"publish","type":"post","link":"https:\/\/eaa-online.org\/arc\/blog\/2019\/05\/29\/when-cash-key\/","title":{"rendered":"When Cash is \u201cKey\u201d"},"content":{"rendered":"

This analysis was originally posted by Audit Analytics<\/a>.<\/p>\n

Cash may be king, but when it comes to auditing, cash is not usually considered a high risk area. The audit procedures around cash usually begin and end with confirming the balance on hand with the company’s banks, and there is very little estimation involved in the balance.<\/p>\n

Despite the relative ease of auditing cash, we found a handful of cases where audit firms identified cash or cash equivalents as a key audit matter – i.e., an area of significant risk of material misstatement.<\/p>\n

Key Audit Matters (“KAMs”) have been required under ISA 701 for fiscal years ending on or after December 15, 2016. Fiscal 2017, therefore, represents the first full year for which KAMs are available. The disclosure of KAMs is meant to increase the usefulness and information provided in the auditor’s opinion. The disclosures made by the auditor are supposed to describe the area of significant audit risk, a summary of the auditor’s procedures to test the audit area, and any key observations of the auditor with respect to that risk (where appropriate).<\/p>\n

Predominantly, the most common KAMs are the usual suspects: Goodwill Impairment and Investment Valuation (Fair Value). It is highly unusual to see Cash given as a Key Audit Matter, but our analysts have found a few such examples.<\/p>\n

\n
\n\t\t\"\"<\/figure>\n<\/div>\n

Below we excerpt these cash-related KAMs from the relevant Annual Reports.<\/p>\n

argenx SE (ARGX: Euronext Brussels)<\/strong>
\n\t2017-12-31 Annual Report
\n\tPage 340<\/p>\n

\n
\n\t\t\"\"<\/figure>\n<\/div>\n

Loomis AB (LOOM B: Nasdaq Stockholm)<\/strong>
\n\t2017-12-31 Annual Report
\n\tPage 120<\/p>\n

In the case of Loomis AB, the KAM related to cash is a little different. Loomis is a cash-handling business – think the armored cars that transport money – and so for them, the cash handling process is definitely a high-risk activity.<\/p>\n

\n
\n\t\t\"\"<\/figure>\n<\/div>\n

Ablynx NV (acquired<\/em>)<\/strong>
\n\t2017-12-31 Annual Report
\n\tPage 105<\/p>\n

\n
\n\t\t\"\"<\/figure>\n<\/div>\n

Galapagos NV (GLPG: Euronext Amsterdam)<\/strong>
\n\t2017-12-31 Annual Report
\n\tPage 140<\/p>\n

\n
\n\t\t\"\"<\/figure>\n<\/div>\n

Great Western Mining Corp PLC (GWMO: London Stock Exchange-AIM)<\/strong>
\n\t2017-12-31 Annual Report
\n\tPage 19<\/p>\n

\n
\n\t\t\"\"<\/figure>\n<\/div>\n

For more information on this analysis, please contact info@auditanalytics.com.<\/span><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

This analysis was originally posted by Audit Analytics. Cash may be king, but when it comes to auditing, cash is not usually considered a high risk area. The audit procedures around cash usually begin and end with confirming the balance on hand with the company’s banks, and there is very little estimation involved in the […]<\/p>\n","protected":false},"author":93,"featured_media":835,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ngg_post_thumbnail":0},"categories":[],"tags":[2],"acf":[],"yoast_head":"\nWhen Cash is \u201cKey\u201d - ARC<\/title>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"When Cash is \u201cKey\u201d - ARC\" \/>\n<meta property=\"og:description\" content=\"This analysis was originally posted by Audit Analytics. Cash may be king, but when it comes to auditing, cash is not usually considered a high risk area. 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