The effect of key audit matters on the audit report lag: evidence from Jordan

Abdullatif, Modar; Alzebdieh, Rami; Ballour, Saeed

doi:10.1108/jfra-07-2022-0245

Cited by 8 publications

(6 citation statements)

References 96 publications

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“…This can be inferred from the fact that the number of KAM reported has increased. The findings of Abdullatif et al (2023) are validated by this research. They discovered that the increase in "going worry and impact of Covid-19" KAM in 2020 represents the worldwide economic implications of the travel prohibition caused by COVID-19 becoming obvious.…”

Section: Univariate Analysissupporting

confidence: 70%

“…Regarding the variable of the key audit matters ( KAM) , the mean (median) value is found 2.688 (1.457). The investigation showed that external auditors in Jordan confirmed 18% on average of KAM disclosers over the period after ISA-701 was implemented to improve audit transparency and reduce “information asymmetry” (Abdullatif et al , 2023). The moderating variable ( COVID ) does have an average (median) value of 0.50 (0.50).…”

Section: Resultsmentioning

confidence: 99%

“…Significant issues that arose during an audit must be reported as KAM by audit firms, but this does not result in separate audit opinions on individual accounts or serve as a substitute for a qualified audit opinion where one is needed (IAASB, 2016). It is up to the audit firm to decide what issues to address and how many KAM to report, along with how much detail to convey regarding each KAM in its report (Abdullatif et al , 2023), which gives the audit firm some flexibility when choosing what to mark as KAM and how to present the KAM information in accordance with the requirements of ISA-701.…”

Section: Institutional Backgroundmentioning

confidence: 99%

“…Furthermore, Abdullatif et al (2023) called for future research to examine the impact of KAM on audit practises using long periods which could enable superior analyses of multiple periods and economic circumstances, easing comparability between steady and troubled times.…”

Section: Introductionmentioning

confidence: 99%

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Key audit matters and auditing quality in the era of COVID-19 pandemic: the case of Jordan

Alharasis,

Alkhwaldi,

Hussainey

2024

IJLMA

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Purpose This study aims to investigate the moderating effect of the COVID-19 epidemic on the relationship between key audit matter (KAM) and auditing quality. Design/methodology/approach The authors use the ordinary least squares regression on data from 942 firm-year observations of Jordanian non-financial institutions across the period (2017–2022) to test the hypotheses. The authors use content analysis method to measure levels of KAM disclosure. Findings The investigation’s findings highlight the importance of KAM disclosure in achieving audit quality in line with international standard on auditing no. 701 (ISA-701) requirements. COVID-19 is also found to have a positive relationship with audit quality, further confirming the crisis’s devastating impact on audit complexity and risks and providing evidence for the need for supplementary, high-quality audit services. Due to the correlation between KAM disclosure and increased auditor workload and responsibility, the analysis reveals that the COVID-19 factor strengthens the link between KAM disclosure and audit quality. Practical implications This study has the potential to be used as a basis for the creation of a new regulation or standard regarding the reporting of unfavourable events in financial filings. This study’s findings provide standard-setters, regulators and policymakers with current empirical data on the effects of implementing ISA-701’s mandate for external auditors to provide more information on KAM. The COVID-19 crisis offers a suitable setting in which to examine the value of precautionary disclosures in times of economic uncertainty, as well as the significance of confidence interval disclosures and the role of external auditing in calming investor fears. This analysis is helpful for stakeholders, regulatory agencies, standard-setters and readers of audit reports who are curious about the current state of KAM disclosures and the implementation of ISA-701. The results may have ramifications for academia in the form of a call for more evidence expanding this data to other burgeoning fields to have a clear explanation of the real impact of reporting KAM on audit practices. Originality/value To the authors’ awareness, this research is one of the few empirical studies on the effect of the COVID-19 crisis on auditing procedures, and more specifically, the effect of disclosures on KAM by external auditors on audit quality. This study’s findings represent preliminary scientific evidence linking the pandemic to business performance. Minimal research has been done on how auditors in developing nations react to pandemic investor protection and how auditors’ enlarged reporting responsibilities affect them. The vast majority of auditing studies have been conducted in a highly regulated system, so this research contributes by examining audit behaviour in a weak legal context.

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Section: Univariate Analysissupporting

confidence: 70%

Section: Resultsmentioning

confidence: 99%

Section: Institutional Backgroundmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Key audit matters and auditing quality in the era of COVID-19 pandemic: the case of Jordan

Alharasis,

Alkhwaldi,

Hussainey

2024

IJLMA

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“…A recent study examines the potential relationship between KAM reporting and ARL (audit report lag) and its findings show that there is no statistically significant relationship between the number of KAMs reported by Jordanian audit firms and audit report lag. But, on the other hand, the research found statistically significant positive relationships between ARL and audit fees, audit firm size, giving a qualified audit opinion and company leverage and a statistically significant negative relationship between ARL and company profitability [126]. Changes in auditing reporting standards have also been supported by academic researchers [127,128] which agree that audit profession development is assured by the auditor credibility [129].…”

Section: Diagram (A)mentioning

confidence: 84%

Sustainable Corporate Performance Based on Audit Report Influence: An Empirical Approach through Financial Transparency and Gender Equality Dimensions

Herghiligiu,

Robu,

Istrate

et al. 2023

Sustainability

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Social, economic and environmental factors contribute to the companies’ sustainable development. Social and financial dimensions have an important contribution to sustainable performance, through assurance of transparency in the information communication requested by stakeholders in order to substantiate their decisions. Social transparency is ensured by presenting organization’s actions in the field of social responsibility, and financial transparency takes into account the most accurate, complete and neutral presentation of information, both in the annual financial statements and in the audit reports. The present study aims to assess the influence of financial transparency and gender equality on the sustainable corporate performance, thus contributing to increasing SDGs awareness and achievement required by 2030 Agenda. Through a sample of 1133 observations (Romanian listed companies/years) to the period 2008–2020, the obtained research results emphasis that gender equality and absence/presence of transparency in financial reporting have a significant influence on corporate sustainable performance.

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Audit report lag and key audit matters in Australia

Rahaman,

Bhuiyan

2024

Int J Discl Gov

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We aim to investigate the impact of mandatory key audit matters (KAMs) disclosure on audit report lag (ARL). Additionally, we examine the potential moderating effect of firm size on the association between KAMs and ARL. We conduct Ordinary Least Square regression analyses using a sample of 602 firm-year observations from 2018 to 2020. Our findings indicate that the disclosure of KAMs is associated with a reduction in firm ARL. Furthermore, we find that the association between KAMs and ARL is particularly pronounced in large firms, suggesting that the impact of KAMs disclosure on ARL is more significant in this context. Additionally, our research reveals that the negative association between KAMs disclosure and ARL becomes more prominent when the education level of the audit committee chair is higher. Our findings underscore the importance of transparent reporting through KAMs disclosure and the role of knowledgeable and educated individuals in audit committees in facilitating a more efficient and timely audit process. Also, our finding indicates that the beneficial effect of KAMs may be more noticeable to larger firms.

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The effect of key audit matters on the audit report lag: evidence from Jordan

Cited by 8 publications

References 96 publications

Key audit matters and auditing quality in the era of COVID-19 pandemic: the case of Jordan

Key audit matters and auditing quality in the era of COVID-19 pandemic: the case of Jordan

Sustainable Corporate Performance Based on Audit Report Influence: An Empirical Approach through Financial Transparency and Gender Equality Dimensions

Audit report lag and key audit matters in Australia

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