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The Informative Value of Key Audit Matters in the Audit Report: Understanding the Impact of the Audit Firm and KAM Type

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Listed:
  • Nicolás Gambetta
  • Laura Sierra‐García
  • María Antonia García‐Benau
  • Josefina Novejarque‐Civera

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, a question of vital importance for stakeholders, whose effective decision‐making depends on the quality of information received. Our analysis shows that the informative value of KAM matter and KAM audit procedures varies according to the audit firm responsible. This informative value also depends on whether the KAM is related to entity‐ or accounting‐level risks. This study contributes to the KAM and audit quality literature by showing how these factors impact on the informative value of the expanded audit report. Furthermore, in the context of the agency, institutional and self‐presentation theories and the real effects hypothesis, we discuss auditors’ incentives to increase or decrease the informative value of the expanded audit report.

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  • Nicolás Gambetta & Laura Sierra‐García & María Antonia García‐Benau & Josefina Novejarque‐Civera, 2023. "The Informative Value of Key Audit Matters in the Audit Report: Understanding the Impact of the Audit Firm and KAM Type," Australian Accounting Review, CPA Australia, vol. 33(2), pages 114-134, June.
    • Handle: RePEc:bla:ausact:v:33:y:2023:i:2:p:114-134
    DOI: 10.1111/auar.12396
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    References listed on IDEAS

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    Cited by:

    1. Yaowen Shan & Sue Wright, 2023. "Keeping up with the Changing World of Accounting," Australian Accounting Review, CPA Australia, vol. 33(2), pages 109-109, June.

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