The Impact Of Key Audit Matters On Investor Perception And Decision

On January 5,2015,the International Auditing and Assurance Standards Board(IAASB)issued a revised audit standard to establish a new international audit reporting model.In order to achieve the international convergence about audit standards,the China Institution of Certified Public Accountants(CICPA)officially released a new audit standard in China to implement a new audit reporting model on December 23,2016,to enhance the audit report relevance and transparency from the perspective of investors,and enhance the communication value of the audit report,one of which requires an disclosure of "key audit matters" in the audit report.This change will have a significant impact on investors' perceived confidence of financial statements,auditors' legal responsibilities,and investment decisions.In this paper,we use MBA as a participant,then make an experimental research to test the influence of the disclosure of key audit matters on the investors' perceived confidence in financial statements,the auditors' legal responsibilities and investment decisions.This paper is divided into six chapters.The first chapter is the introduction;the second chapter is the literature review,combs and summarizes the research about audit report,the relationship between audit report reform and the user,between the auditor's responsibility and the investors,then further analyzes and discusses what still needs to be solved in the future.The third chapter is the theoretical basis and research hypothesis,including the concept definition,the analysis and elaboration of the theory of information processing,guilty control and behavior decision,then proposing hypothesis;the fourth chapter is the experimental design,including the determination of the subjects,the experimental tasks,the experimental processes and the determination of independent variables and dependent variables;Chapter 5 is the experimental results,including the result analysis of the influence about disclosing key audit matters on investors' perceived confidence in financial statements,auditors' legal responsibility and the investment possibility.At last,the conclusion of this paper includes the basic conclusions and policy recommendations,then points out the limitations of this study and proposes future research prospects.The main conclusions of this paper are:(1)Through the theory of information processing,guilty control and the decision-making of behavior,the disclosure of key auditing matters would reduce the investors' perceived confidence in financial statements,the legal liability of auditors and the possibility of investment.(2)The experimental results show that the disclosure of key audit matters reduces the level of confidence in the financial statements area identified as a critical audit matter,perceived legal liability for audit and investment possibilities.(3)The experimental results indicate that the disclosure of key audit matters and related procedures significantly increases investors' confidence in financial statements compared to disclosure of key audit matters alone;In the case of disclosure of key audit matters and related procedures,there is no significant evidence indicating that disclosure of key audit matters and higher level assurance of procedures improves investors' confidence in financial statements,as compared to the disclosure of key audit matters and lower assurance levels.(4)The results of the experiment argue that there is no evidence indicating that the disclosure of relevant procedures related to the key audit matters will lead to different result in perceived legal liability,as compared to disclosure of the key audit matters alone;In the case of disclosure of key audit matters and related procedure,no evidence is found to indicate that the degree of assurance provided by the relevant procedure would have a significant difference in the perceived legal liability.(5)The results of the experiment also show that the investment possibility is increased when the relevant procedure is disclosed as compared to the disclosure of key audit matters alone.In the case of simultaneous disclosure of key audit matters and related procedures,no evidence is found indicating that the degree of assurance provided by the relevant procedure would have a significant difference in investment possibilities.