Research On The Impact Of Communication Of Key Audit Matters On Auditors In Audit Report

The most important value of audit report is to reduce the information asymmetry between financial information users and auditors.However,the traditional audit report also has the problem of information asymmetry for the users.Improving the transparency of audit process and more disclosure of audit behavior are important to enhance public confidence and reduce information risk.ISA701 was issued in 2015 by the International Audit and Assurance Standards Board,which requires CPAs to disclose key audit matters in audit reports.In order to be in line with the international standards,the Ministry of Finance of China issued the Auditing Standards for Certified Public Accountants No.1504in December next year,which require CPAs to communicate key audit matters in audit reports and open the door for personalized service of audit reports in China.Most scholars at home and abroad believe that communicating key audit matters in audit reports can improve the information content and audit quality of audit reports,but at the same time it will increase the audit cost and litigation risk of CPAs.This paper uses empirical and normative methods to analyze the impact of communicating key audit matters on auditors.Audit subject refers to the executor of audit behavior^[1].In financial statements audit,audit subject refers to CPAs,sometimes also refers to the accounting firm where it belongs.Firstly,the key audit matters disclosed in 2017 audit reports of listed companies are collected manually and summarized.Statistics show that there are 4 087 key audit matters disclosed in 1937 audit reports of sample companies,of which the most are related to income and impairment of assets,with an average of 2.11 key audit items disclosed in each audit report.For different industries,CPAs have different emphasis on key audit matters,which can reflect certain industry characteristics.Then,taking the listed companies of A-share non-financial industry from 2016 to 2017 as samples,this paper studies the impact of key audit matters on CPAs by grouping T-test and regression analysis,with three variables:audit quality,audit pricing and audit report delay.Four main conclusions are drawn:?1?communication of key audit matters in audit reports can improve the audit quality of CPAs;?2?communication of key audit matters in audit reports will increase the audit fees charged by CPAs;?3?communication of key audit matters in audit reports will lead to a longer delay in audit reports;?4?communication more matters,the more audit fees CPAs charge.On the basis of this analysis,the sample data are grouped according to the size of the accounting firms.The regression results show that compared with the"four big"accounting firms,the key audit matters have greater impact on the audit quality,audit fee and audit report delay of the"non-four big"accounting firms.Finally,in order to strengthen the role of key audit matters and further reduce the information asymmetry of auditing tripartite stakeholders,this paper puts forward three suggestions:?1?improve the comprehensive ability of CPAs;?2?balance the information content of key audit matters and the litigation risk of CPAs;?3?cultivate the financial understanding ability of users of financial information.