Research On The Impact Of Key Audit Matters On Audit Quality

At the present stage,the external capital market is becoming more and more complex,and the amount of information is also complex.However,due to the need to avoid legal risks and litigation liabilities,the audit report model has evolved into a standard minimalist model,and the additional relevant and reliable information in the audit report is constantly reduced.Poor information and communication expectations of audit reports are increasingly prominent in the contradiction between the growing demand for information from investors and the fact that auditors avoid responsibility and disclose less information.Therefore,it is imperative to improve the current mode of audit reports.Because the current standard audit report information content is insufficient,better meet the information needs of investors,in January 2015,the IAASB formally issued the new international audit report standards,in the standard audit report to increase the disclosure of key audit matters(KAM)is its substantive change.China's audit standards had achieved international convergence earlier than 2010,so the Chinese Institute of Certified Public Accountants also issued a draft revision of audit standards for public comment,and the ministry of finance issued new audit reporting standards in 2016,including the newly formulated standards on key audit matters.The guidelines require A+H-shares listed companies to take the lead in disclosing key audit matters on January 1,2017,and disclose them in the financial audit reports of all A-shares listed companies in 2018.Based on the requirements of the new audit standards for the disclosure of key audit matters,this paper takes Shanghai and Shenzhen A-shares companies in 2015-2017 as samples and adopts normative analysis and empirical research method to test the issue of mandatory disclosure of this matter and whether the quantity of disclosure has an impact on audit quality.It is proposed to use the controllable accruals calculated by the modified Jones model and the performance matching model as an alternative indicator of audit quality.The research finds that the disclosure of key audit matters helps to reduce the company's earnings level,thus improving the audit quality.Compared with the big four accounting firms,the audit quality of non-big four accounting firms has improved significantly.There is no significant difference between the nature of enterprises and the disclosure of key audit matters to improve audit quality.A further study of the companies disclosing key audit matters found that the more the number of key audit matters disclosed,the more significant the improvement of audit quality.In 2017,the higher the number of key audit matters disclosed by the top 10 accounting firms and non-state-owned enterprises,the higher the audit quality will be.In addition,the disclosure of different types of key audit items also has an impact on audit quality.Listed companies that disclose major transactions or items and asset pricing items have higher audit quality.The research has certain practical significance.There are a few domestic studies on the impact of this event segment on the communication value of financial reports and the audit quality,but they are all comparative or matching studies on A+H-shares companies.Based on all A-share listed companies as the research object,the research for the disclosure of the key audit matters can improve audit quality provides a relatively clear empirical evidence,related key audit matters found that will help us preliminary evaluation criteria of the implementation.That will have positive significance for the parties involved in the marketing activities,including regulators,investors and public accounting firms.The conclusions and suggestions of this paper also have certain reference significance for the revision of audit standards and the perfection of the disclosure of key audit matters in the future.