Describe how the audit opinion issued on diageo plc

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Question - Diageo plc is a British multinational alcoholic beverages company formed in 1997 from the merger of Guinness and Grand Metropolitan. Diageo has a primary listing on the London Stock Exchange and a secondary listing on the New York Stock Exchange. Diageo's brands include Smirnoff, Johnnie Walker, Bailey's, and Guinness. Diageo plc's group financial statements are prepared in accordance with IFRS (as adopted by the European Union), and the company financial statements are prepared in accordance with UK accounting standards. PricewaterhouseCoopers LLP is the company's auditor, and conducts its audit in accordance with ISAs (UK). In January 2015, the IAASB released its new and revised Auditor Reporting standards, which included ISA 701, Communicating Key Audit Matters in the Independent Auditor's Report. The objective of ISA 701 is to specify the auditor's responsibility to communicate key audit matters, addressing both the auditor's judgment as to what to communicate in the report and the form/content of such communication. According to IAS 701.02, "The purpose of communicating key audit matters is to enhance the communicative value of the auditor's report by providing greater transparency about the audit that was performed." ISA 701 is effective for audits of financial statements for periods ending on/after December 15, 2016. Your U.S. based audit firm recently acquired an international company as an audit client. Your audit partner wants to know how best to apply ISA 701 to its audit. The partner heard that PwC applied ISA 701 for the audit of Diageo plc's 2019 annual report. As your firm is a U.S. based audit firm, the partner would also like to know how ISA 701 differs from the PCAOB audit standard AS 3101 that requires the reporting of Critical Audit Matters. Your assignment is to examine PwC's audit opinion in Diageo plc's 2019 annual report, reference applicable audit standards and answer the following questions:

1) Describe how the audit opinion issued on Diageo plc's financial statements meets the requirements of ISA 701.

2) Describe how the audit opinion issued on GE's financial statements meets the requirements of AS 3101.

3) Describe how the reporting requirements for ISA 701 differ from AS 3101. Also kindly share the steps you took in researching ISA 701 and AS 3101.

Reference no: EM132724825

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