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The perceived impact of the KAM reforms on audit reports, audit quality and auditor work practices: stakeholders’ perspectives

The perceived impact of the KAM reforms on audit reports, audit quality and auditor work... The purpose of this study is to understand how the new reforms related to key audit matters (KAM) disclosures in Australia may have impacted audit quality by eliciting the perceptions of key stakeholders in the audit and assurance services market.Design/methodology/approachThe study uses a qualitative approach and New Institutional Sociology (NIS) to explain how auditors have responded to the KAM reforms. Interviews were conducted with 20 individuals representing identified groups of stakeholders in the market for audit and assurance services in Australia.FindingsThe study finds there is little consensus between some stakeholder groups on whether the KAM reforms may have improved audit quality, based on the perceptions shared. The findings conveyed that the auditors and regulators, standard setters acknowledge that KAM disclosures are either costly and/or time-consuming to implement. The Big Four auditors indicate these reforms led to changes mainly around internal consultations and independent reviews, whereas the non-Big Four auditors highlighted increased interactions with audit clients.Originality/valueThis is one of the first studies to examine the perceived post-implementation impacts on audit quality of the KAM reforms (ISA 701) after the initial two years of implementation and how auditors have responded, explored through the lens of institutional logic. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Managerial Auditing Journal Emerald Publishing

The perceived impact of the KAM reforms on audit reports, audit quality and auditor work practices: stakeholders’ perspectives

Nguyen, Lan Anh; Kend, Michael
Managerial Auditing Journal , Volume 36 (3): 26 – Jul 19, 2021
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References (89)

Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
0268-6902
DOI
10.1108/maj-10-2019-2445
Publisher site
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Abstract

The purpose of this study is to understand how the new reforms related to key audit matters (KAM) disclosures in Australia may have impacted audit quality by eliciting the perceptions of key stakeholders in the audit and assurance services market.Design/methodology/approachThe study uses a qualitative approach and New Institutional Sociology (NIS) to explain how auditors have responded to the KAM reforms. Interviews were conducted with 20 individuals representing identified groups of stakeholders in the market for audit and assurance services in Australia.FindingsThe study finds there is little consensus between some stakeholder groups on whether the KAM reforms may have improved audit quality, based on the perceptions shared. The findings conveyed that the auditors and regulators, standard setters acknowledge that KAM disclosures are either costly and/or time-consuming to implement. The Big Four auditors indicate these reforms led to changes mainly around internal consultations and independent reviews, whereas the non-Big Four auditors highlighted increased interactions with audit clients.Originality/valueThis is one of the first studies to examine the perceived post-implementation impacts on audit quality of the KAM reforms (ISA 701) after the initial two years of implementation and how auditors have responded, explored through the lens of institutional logic.

Journal

Managerial Auditing Journal – Emerald Publishing

Published: Jul 19, 2021

Keywords: Audit quality; Audit reports; Key audit matters; Multi logics; M42; M48

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