Key audit matters: insight from audit experts
ISSN: 2049-372X
Article publication date: 4 June 2019
Issue publication date: 11 June 2019
Abstract
Purpose
Key audit matters (KAM) and their impact on the auditor is a relatively understudied area. The purpose of this study is to analyse whether auditors perceive that the recent requirement for auditors of listed companies to report KAMs has enhanced the transparency of audit reports or not, what additional risks they now face, how the risk is being managed and its impact on the relationship with their clients.
Design/methodology/approach
The paper uses an interpretive approach for detailed interviews with some of South Africa’s leading audit experts to highlight their perspective of the impact of KAM on audit reporting and the audit environment.
Findings
The experts have various perceptions of what makes a matter “key”. These vary from materiality, to subjectivity and difficulty, as well as incorporating a time-based consideration. Concerns identified include a significant increase in cost and an increase in potential liability, triggering the need for thorough internal risk management policies. The audit experts conclude that KAM has ultimately failed to achieve its goal of greater transparency, with clients virtually ignoring KAM reports.
Research limitations/implications
The research relies on a relatively small sample of subject experts and may not provide a complete account of the view of all audit professionals and KAM reports issued. It analyses the impact of KAM from the preparers’ perspective.
Originality/value
This study contributes to the research conducted in this topical area. Although there has been research on KAM focusing on pre-implementation consequences, there is virtually no formal academic research on the impact KAM has had on audit partners and firms in South Africa post implementation. It may also serve as a basis for the IAASB to consider going forward.
Keywords
Acknowledgements
The author would like to acknowledge and thank the following people for their assistance: Professor Warren Maroun for his oversight function, supervision and guidance. It is a privilege to have had the support of one of the industry’s most accomplished authors. Mrs Lelys Maddock for her editorial and language assistance. The respondents for giving of their time and expertise.
Citation
Segal, M. (2019), "Key audit matters: insight from audit experts", Meditari Accountancy Research, Vol. 27 No. 3, pp. 472-494. https://doi.org/10.1108/MEDAR-06-2018-0355
Publisher
:Emerald Publishing Limited
Copyright © 2019, Emerald Publishing Limited