Analysis And Improvement Of Disclosure Of Key Audit Matters By Accounting Firms

With the rapid development of China’s capital market,investors and regulators have put forward higher requirements for the authenticity and information content of audit reports.in December 2016,new auditing report standards came into being,changing the traditional binary audit report model and requiring disclosure of key audit matters in the audit report,leaving room for CPAs to "play The new auditor’s report standard was issued in December 2016,changing the traditional binary audit report model and requiring disclosure of key audit matters in the audit report,leaving room for CPAs to " play.However,there are still many problems in the actual disclosure,and it is imperative to improve the quality of disclosure of key audit matters.This paper analyzes and evaluates the disclosure of key audit matters in CPA firm B,identifies the problems in the disclosure and makes recommendations,aiming to improve the disclosure of key audit matters and enhance the disclosure of key audit matters by CPAs.At the same time,this study also helps to enrich the theoretical research on the disclosure of key audit matters from the firm’s perspective and contributes to the positive results of the new auditor’s reporting standards reform so that the reform results can be put into practice.After clarifying the research background and research purpose,this study is based on information asymmetry theory,signaling theory,and path dependence theory,and takes the key audit matters disclosed by A-share listed companies by accounting firm B from 2017 to 2021 as the research object,and uses a combination of literature research method,case study method,fuzzy comprehensive evaluation method,and comparative analysis method.After introducing the overall disclosure situation of Chinese firms and the disclosure situation of CPA firm B,firstly,the disclosure characteristics of key audit matters were analyzed in terms of the number,length,and category of disclosed matters,and the disclosure contents of hot matters in manufacturing and financial industries were analyzed in terms of titles,matter description elements,and audit response procedures.Secondly,we invited industry experts to evaluate the disclosure of key audit matters,and used the fuzzy comprehensive evaluation method combined with the hierarchical analysis method to construct a comprehensive evaluation index system,quantify the experts’ opinions,and obtain a comprehensive score.The overall evaluation results ranged from "fair" to "good",with the lowest score for the indicator of "selection of matters" and the highest score for the indicator of "audit response paragraph".The highest scores were obtained for the "audit response paragraph" indicator,but neither of them reached "good",indicating that there are problems with the disclosure of key audit matters.Then,we use the comparative analysis method to compare with the excellent disclosure model and point out the problems in the disclosure,and the problems in the selection of key audit matters by CPA firm B are not enough to consider the actual situation of the auditees in the current year,which are manifested in the insufficient number of disclosures and the high repetition of disclosures in each year,the lack of clarity and precision in the formulation of titles,the insufficient information content in the matter description paragraph,which are manifested in the incomplete disclosure of matter description elements and the lack of convincing reasons for confirmation.The information content of the description paragraph is insufficient,which is reflected in the incomplete disclosure of matter description elements,the lack of convincing reasons for confirmation,and the high degree of similarity;the readability of the audit response paragraph is not strong,which is reflected in the incomplete disclosure of audit response procedures,the lack of changes in audit response procedures,and the lack of conclusive evaluation.Finally,the study on the disclosure of key audit matters in CPA firm B has certain implications for CPAs,firms and industry associations,etc.: CPAs should enhance their professional competence,develop specific industry expertise,and strengthen their communication and writing skills.Chinese CPA firms should change their training methods by combining training and assessment,using multiple platforms for training,etc.;establish incentive mechanisms to improve CPAs’ motivation by setting standards and conducting competitions;and strengthen project quality control to ensure that project quality reviews achieve the expected results.The industry association can further refine the application guidelines in response to the actual situation.In response to the problems in the disclosure of key audit matters,it is suggested that CPAs should fully consider the actual situation of the current year when disclosing and not blindly copy the key audit matters of previous years;draw up appropriate and reasonable titles and specify the risk points in the titles;enhance the information content of the matter description paragraph and describe the key audit matters from multiple perspectives;to enhance the readability of the audit response paragraph,they can disclose the necessary alternative procedures,make conclusive comments at the To enhance the readability of the audit response paragraph,you can disclose the necessary alternative procedures,conclude with a concluding comment,reduce the use of technical terms,etc.