 The effect of key audit matters and management disclosures on auditors’ judgements and decisions: An exploratory studyJin Ma, Paul Coram and Indrit Troshani The British Accounting Review, 2024, vol. 56, issue 2 Abstract: We investigate how disclosure of key audit matters (KAMs) and related management footnote disclosures on a subjective accounting estimate relating to fair value in the financial statement footnotes affect auditors' perceptions of their accountability and their subsequent adjustment decisions. In relation to accountability, a substitution effect is found between KAMs disclosures and footnotes. That is, auditors believe that they are less accountable either when they can report on the fair value estimates in KAMs disclosures, or when management has provided expanded fair value related footnotes. However, we find that when the fair value disclosure is considered by both KAMs and expanded footnotes it results in the auditor recommending a more conservative fair value adjustment decision. Overall, our results show that the requirement to disclose KAMs does make a real difference and interacts with management's disclosures to affect auditors' perceptions of accountability and their adjustment decisions. Keywords: Key audit matters; Management disclosures; Fair value accounting estimate; Accountability; Adjustment decisions (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:bracre:v:56:y:2024:i:2:s0890838923001634 DOI: 10.1016/j.bar.2023.101301 Access Statistics for this article The British Accounting Review is currently edited by Nathan Lael Joseph and Alan Lowe More articles in The British Accounting Review from Elsevier |
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