Disclosure Of Key Audit Matters And Accounting Conservatism

In order to improve the quality of audit reports,the International Auditing and Assurance Standards Board and the Ministry of Finance of China issued new audit reporting standards in 2015 and 2016 respectively,requiring auditors to disclose key audit matters in their audit reports.Therefore,whether the disclosure of key audit matters can become a more valuable communication tool and whether it has other unintended effects have become the focuses of attention and debate.By the comparative analysis of the key audit matters disclosed in the audited reports of Chinese A-share listed companies,this paper found that the contents of the key audit matters can well reflect the characteristics of the industry and the individual company,and annual disclosures provide continuous information to users of financial statements and audit reports.Comparisons with goodwill impairments and material assets reorganization matters indicated that key audit matters facilitate the transfer of information on the company's risk to investors,but the effect is limited due to the nature of audit,misunderstanding or improper implementation of auditing standards requirements by managements and auditors,standardization and generalization of description of the key audit matters.Disclosure requirements for key audit matters put pressure and risk on auditors as well as management,which makes them rethink the application of the accounting conservatism principle.For the purpose of further explore the impact of key auditing matters on the accounting conservatism of listed companies,this paper selected the relevant data of non-financial listed companies in 2016-2017 as a sample,and measured the accounting conservatism of different companies in each year by C SCORE model,then defined related variables and performed multiple regression analysis.The empirical results showed that the auditor's disclosure of key audit matters in the audit report significantly improves the level of accounting conservatism of the audited entity.This positive impact is more pronounced among state-owned listed companies than non-state-owned listed companies.Furthermore,disclosure of key audit matters is more conducive to improving the accounting conservatism among listed companies audited by big four international audit firms or top-ten native audit firms.