The informative value of Key Audit Matters in the audit report

Nicolás Gambetta, Laura Sierra García, María Antonioa García Benau and Josefina Novejarque Civera
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Laura Sierra García: Universidad Pablo de Olavide
María Antonioa García Benau: Universidad de Valencia
Josefina Novejarque Civera: ESIC Business & Marketing School

No 129, Documentos de Investigación from Universidad ORT Uruguay. Facultad de Administración y Ciencias Sociales

Abstract: This paper examines whether the readability (and hence informative value) of Key Audit Matters (KAM) varies according to the audit firm and the KAM type disclosed, thus providing stakeholders with different information quality for effective decision making. Our analysis shows that the informative value of published descriptions of KAM matter and KAM audit procedures varies according to the audit firm responsible. This informative value also depends on whether the KAM concerns entity-level or accounting-level risks. This study contributes to stakeholder theory and to the literature on audit report quality by showing how the characteristics of the audit firm and the type/content of KAM presented impact on the informative value of the expanded audit report. Furthermore, we suggest that audit firms may increase or decrease the informative value of the audit report according to the type of KAM disclosure made.

Keywords: audit quality; audit expectation gap; audit report; key audit matter; readability (search for similar items in EconPapers)
JEL-codes: M42 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2022-01
New Economics Papers: this item is included in nep-acc
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