Research On The Impact Of Key Audit Matters On Audit Costs

China's auditing authorities responsible for making new auditing standards stipulated that key audit matters would be disclosed on a pilot basis in A+H-share listed companies on January 1,2017,and the regulation would be fully implemented in A-share listed companies from 2018.Based on this policy background,this article first interprets the determination of Key Audit Matters(KAM is short for Key Audit Matters)and the policy requirements described in the content in the new auditing standards in China and then introduces the key audit matters disclosed in the audit reports of listed companies in China from three aspects.(1)Find that the largest average number of key audit matters disclosed in the audit reports of listed companies is the financial industry based on statistical analysis from the industry dimension;(2)Find that the average number of the "Big Four" accounting firms is higher than that of domestic accounting firms by statistics on the average number of key audit matters disclosed in audit reports issued by accounting firms based on the statistical analysis of the types of accounting firms;(3)Find that about 70%of the existing audit reports disclose asset impairment matters and income recognition matters according to the classification and statistics of different types of key audit matters.In order to further study the economic consequences of key audit matters,this article uses 2016-2018 A-share listed companies with a total of 6341 observations as a research sample to empirically test the actual impact of the number of key audit matters,the amount of asset-type matters and expense-type matters in key audit matters disclosed in audit reports on audit costs.The empirical results find that:(1)the number of key audit matters is significantly positively related to audit costs;(2)the amount of key audit matters for assets is significantly positively related to audit costs;(3)the amount of key audit matters for expenses is significantly negatively related to audit costs;(4)Compared with non-state-owned enterprises,the number of key audit matters disclosed in the audit reports of state-owned enterprises has no significant impact on audit costs;Compared with non-state-owned enterprises,the amount of assets-type key audit matters disclosed in the audit reports of state-owned enterprises has a more significant positive impact on audit costs;Compared with non-state-owned enterprises,the amount of expenses related to key audit matters disclosed in the audit reports of state-owned enterprises has a more significant negative impact on audit costs;(5)Compared with non-Big 4 accounting firms,the number of key audit matters in the audit reports issued by Big 4 accounting firms has no significant impact on audit costs;Compared with non-Big 4 accounting firms,the amount of asset-type key audit matters in the audit reports issued by the Big 4 accounting firms has no significant impact on audit costs;Compared with non-Big 4 accounting firms,the amount of key audit matters disclosed in the audit reports issued by the Big 4 accounting firms has a more significant negative impact on audit costs.Finally,the article puts forward relevant policy suggestions based on the empirical results of this study.This article analyzes the disclosure of key audit matters,and studies the impact of the number and amount of key audit matters on audit costs.It enriches the academic literature in the field of key audit matters,tests the implementation of the new audit policy,and has positive and practical significance for auditing related departments.