Risk Factors Regarding Revenue Recognition As Key Audit Matters (Kam)

Revenue is known to be one of the most important performance indicators of a company. Revenue recognition policy involves a high level of management judgment and, not infrequently, management may feel some pressure to achieve the planned results. Based on these issues, it is found that revenue recognition is a key audit issue frequently encountered in auditors' reports. Auditors justify this classification by the fact that the principles that an entity must apply regarding the nature, value, timing and uncertainty of revenue generated by a contract with a client are quite complex, according to IFRS 15 “Revenue from Contracts with Customers†and important for users to understand the financial statements. This study aims, on the one hand, to demonstrate that revenue recognition is the most common key audit aspect reported by auditors in the last five years, being influenced, in particular, by the object of activity. On the other hand, the risk factors that determine the classification of revenue recognition to key audit issues are identified, and the regression model applied highlights the fact that the audit opinion is influenced, in particular, by the professional reasoning regarding the time of revenue recognition. Depending on these aspects, a company profile is also identified in the analyzed sample. The sample studied is represented by companies listed on the BSE on the regulated market, analyzing the audit reports published in the period 2016-2020, with a number of 344 observations.