The perceived impact of the KAM reforms on audit reports, audit quality and auditor work practices: stakeholders’ perspectives
ISSN: 0268-6902
Article publication date: 17 May 2021
Issue publication date: 19 July 2021
Abstract
Purpose
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/approach
The 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.
Findings
The 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/value
This 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.
Keywords
Acknowledgements
Thank you for the financial support of CPA Australia and AFAANZ through their academic research grant schemes. Also, thanks to Dr Mahesh Joshi and Dr Prem Yapa from RMIT University for their helpful comments.
Citation
Nguyen, L.A. and Kend, M. (2021), "The perceived impact of the KAM reforms on audit reports, audit quality and auditor work practices: stakeholders’ perspectives", Managerial Auditing Journal, Vol. 36 No. 3, pp. 437-462. https://doi.org/10.1108/MAJ-10-2019-2445
Publisher
:Emerald Publishing Limited
Copyright © 2021, Emerald Publishing Limited