The Implementation of the KAM Reforms in Saudi Arabia: Stakeholder Perspectives on the Audit Expectations Gap

IF 2.1 4区 管理学 Q2 BUSINESS, FINANCE
Saeed Al Qahtani, Duc Hong Thi Phan, Michael Kend, Ola Mohammed A. Alghasham
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Abstract

This exploratory study investigates the implementation of key audit matters (KAM) in audit reports under ISA701 to better understand how KAM disclosures may help narrow the audit expectations gap. The study draws on findings from semi-structured interviews with 28 professional stakeholders from the Kingdom of Saudi Arabia (KSA). The study's aim was to explore the relationship between KAM disclosures and the audit expectations gap considering audit quality concerns. Our findings reveal that (i) financial statement users report that they better understand what the auditor does, which enhanced their confidence in the audit process; and (ii) at least some financial statement users report that KAM disclosures provide new information about companies' risks that management was not already providing. We further report that many interviewees (particularly Big Four external auditors) indicated that the KAM reforms did not enhance audit quality in KSA. Interestingly, a small number of non-Big Four auditors believed that KAM disclosures have enhanced audit quality. The key message is that the KAM reforms did not necessarily improve audit quality but that they are perceived to have played a role in further narrowing the audit expectations gap and reducing the need for communication, thus creating market efficiencies.

Abstract Image

沙特阿拉伯KAM改革的实施:利益相关者对审计期望差距的看法
本探索性研究调查了ISA701下审计报告中关键审计事项(KAM)的实施情况,以更好地了解关键审计事项披露如何有助于缩小审计预期差距。该研究利用了对沙特阿拉伯王国(KSA) 28名专业利益相关者进行的半结构化访谈的结果。本研究的目的是探讨在考虑审计质量问题的情况下,KAM披露与审计期望差距之间的关系。我们的研究结果显示:(1)财务报表使用者报告说他们更了解审计师的工作,这增强了他们对审计过程的信心;(ii)至少有一些财务报表使用者报告说,财务信息评估披露提供了管理层尚未提供的有关公司风险的新信息。我们进一步报告说,许多受访者(特别是四大外部审计公司)表示,KAM改革并没有提高KSA的审计质量。有趣的是,一小部分非四大会计师事务所认为审计信息披露提高了审计质量。关键的信息是,审计监督制度改革不一定能提高审计质量,但它们被认为在进一步缩小审计预期差距和减少沟通需求方面发挥了作用,从而提高了市场效率。
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来源期刊
CiteScore
3.70
自引率
15.00%
发文量
43
期刊介绍: In addition to communicating the results of original auditing research, the International Journal of Auditing also aims to advance knowledge in auditing by publishing critiques, thought leadership papers and literature reviews on specific aspects of auditing. The journal seeks to publish articles that have international appeal either due to the topic transcending national frontiers or due to the clear potential for readers to apply the results or ideas in their local environments. While articles must be methodologically and theoretically sound, any research orientation is acceptable. This means that papers may have an analytical and statistical, behavioural, economic and financial (including agency), sociological, critical, or historical basis. The editors consider articles for publication which fit into one or more of the following subject categories: • Financial statement audits • Public sector/governmental auditing • Internal auditing • Audit education and methods of teaching auditing (including case studies) • Audit aspects of corporate governance, including audit committees • Audit quality • Audit fees and related issues • Environmental, social and sustainability audits • Audit related ethical issues • Audit regulation • Independence issues • Legal liability and other legal issues • Auditing history • New and emerging audit and assurance issues
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