Factors Influencing Key Audit Matters Disclosures: Patterns from an Emerging Economy
| Saifuddin Khan* Department of Accounting and Information Systems University of Rajshahi, Bangladesh |
Kowshik Paul Department of Accounting and Information Systems University of Rajshahi, Bangladesh |
|
Jannatul Ferdousy Supty |
Raj Kumar Moulick Department of Accounting and Information Systems University of Rajshahi, Bangladesh |
DOI: https://doi.org/10.63817/jmagp.02.2025.002
Received February 16, 2025
Revised May 22, 2025
Accepted May 28, 2025
Abstract
Purpose: The objective of this research is to examine the factors influencing the disclosure of key audit matters (KAMs) in the audit report.
Methodology: The study covered the period 2018–2022, using 660 observations to collect data from 132 non-financial listed companies in Bangladesh. Based on agency theory, the research study established a conceptual framework and evaluated the hypotheses by applying fixed-effect regression analysis.
Findings: The study’s findings revealed that companies most frequently disclosed KAMs related to revenue recognition, accounts receivable, inventory valuation, and fixed asset valuation. Regression analysis found that audit committee (AC) members, the independence of the AC, and audit tenures have a positive and significant effect. However, the financial reporting expertise of the AC members indicates a negative and significant impact on the disclosure of KAMs. Additionally, Big 4 audit firms, auditor changes, and qualified audit opinions negatively influence the reporting of KAMs.
Implications: The research findings carry significant implications for meeting the needs of users of accounting information. This study aims to reduce the expectation gaps among information users, auditors, and audit regulators. The findings will assist in shaping the policy
perspectives of audit regulators and standards setters to enhance audit quality and auditor characteristics to improve transparency.
Originality: A model involving multiple variables and a conceptual framework has been developed to explore the influencing dynamics of reporting KAM in Bangladesh. The evidence is closely tied to these approaches.
Keywords: KAMs, Audit Committee, Audit Tenure, Auditor Change, Big4, Audit Opinion.
Paper type: Research paper
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