Tell Me More: A content analysis of expanded auditor reporting in the United Kingdom

Smith, Kecia Williams

doi:10.1016/j.aos.2023.101456

Cited by 23 publications

(10 citation statements)

References 65 publications

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“…Meanwhile, some research has confirmed several benefits of the EAR, e.g. increasing the readability and quality of audit reports (Smith, 2023; Li et al , 2019) and providing relevant information for stakeholders’ decision-making (Alves Júnior and Galdi, 2019; Tiron-Tudor et al , 2018; Sneller et al , 2017; Prasad and Chand, 2017; Christensen et al , 2014; Cordoş and Fülöp, 2015). Other research showed the essential impact of EAR on the accuracy and dispersion of analyst forecasts (Hu et al , 2022; Venturini et al , 2022), reduced management misbehaviors (Klueber et al , 2018); improving financial quality (Reid et al , 2019).…”

Section: Results Of Content Analysismentioning

confidence: 99%

Mapping the state of expanded audit reporting: a bibliometric view

Mashayekhi

Dolatzarei

Faraji

et al. 2023

MEDAR

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Purpose This study aims to identify the intellectual structure of expanded audit reporting (EAR), offers a quantitative summation of prominent themes, contributors and knowledge gaps and provides suggestions for further research. Design/methodology/approach This research uses various bibliometric techniques, including co-word and co-citation analysis for EAR science mapping, based on 123 papers from Scopus Database between 1991 and 2022. Findings The results show EAR research is focused on Audit Quality; Auditor Liability and Litigation; Communicative Value and Readability; Audit Fees; and Disclosure. Regarding EAR research, Brasel et al. (2016), article is the most cited paper, Bédard J. is the most cited author, Laval University is the most influential university, The Accounting Review is the most cited journal and USA is the leading country. Furthermore, the results show that in common law countries, in which shareholder rights and litigation risk is high, topics such as disclosure quality and audit litigation have been addressed more; and in civil legal system countries, which usually favor stakeholders’ rights, topics of gender diversity or corporate governance have been more studied. Practical implications This research has practical implications for standard setters and regulators, who can identify important, overlooked and emerging issues and consider them in future policies and standards. Originality/value This paper contributes to the literature by providing a more objective and comprehensive status of the accounting research on EAR, identifying the gaps in the literature and proposing a direction for future research to continue the discussion on the value-relevance of EAR to achieve more transparency and less audit expectation gap.

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Section: Results Of Content Analysismentioning

confidence: 99%

Mapping the state of expanded audit reporting: a bibliometric view

Mashayekhi

Dolatzarei

Faraji

et al. 2023

MEDAR

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“…The objective of the expanded auditor report was to bring transparency in auditing and its reporting, and to reduce the information asymmetry that exists between stakeholders and management of the company (Smith, 2021). The assumption that more disclosure enhances transparency underpins KAMs reporting.…”

Section: Discussionmentioning

confidence: 99%

Perceived effects of key audit matters reporting on audit efforts, audit fees, audit quality, and audit report transparency: stakeholders’ perspectives

Bepari,

Nahar,

Mollik

2024

QRAM

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Purpose This paper aims to examine the perspectives of auditors, regulators and financial report preparers on the effects of key audit matters (KAMs) reporting on audit effort, fees, quality and report transparency. Design/methodology/approach The authors conducted 21 semi-structured interviews with stakeholders (13 Audit Partners, 5 Chief Financial Officers and 3 regulators) and thematically analysed the interviews. They use the frame of “Paradox of Transparency” to explain the findings. Findings Auditors perceive that the overall quality control of their audits has improved both in the planning and execution stages, and such improvement can mostly be attributed to the coercive pressures from professional bodies and regulators. Nevertheless, audit fee remains unchanged. Auditors disclose industry generic items and descriptions of KAMs, sometimes masking the real problem areas of the clients. Even after improving the performative audit quality, transparency of audit reporting has not improved. Issues that warrant going concern qualifications or audit report modifications are now reported as KAMs. Hence, KAMs reporting might make the audit report less transparent. Practical implications Localised audit environments and institutions affect the transparency of KAMs reporting. Without attention to corporate governance and auditors’ independence issues, paradoxically, performative improvement in audit quality (due to the KAMs reporting requirement) does not enhance the transparency of audit reports. Originality/value To the best of the authors’ knowledge, this study is the first to provide field-level evidence in Bangladesh and other developing countries about the perceptions of auditors, financial report preparers and regulators on the effects of KAMs reporting on audit efforts, fees, quality and report transparency.

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“…In general, studies find that the number of KAMs increases with client risk and complexity (e.g. Camacho-Miñano et al, 2023;Klevak et al, 2022;Pinto & Morais, 2019;Smith, 2023). In contrast, there is inconsistent evidence for audit firm characteristics such as size, industry expertise and level of client dependence influencing the number of KAMs (e.g.…”

Section: Background and Research Questionsmentioning

confidence: 99%

“…Another aspect of audit reports highlighted by prior studies is the sentiment of KAM disclosures as it indicates their evaluative content (e.g. Abdelfattah et al, 2021;Seebeck & Kaya, 2022;Smith, 2023).…”

Section: Linguistic Features Of Kam Disclosuresmentioning

confidence: 99%

The determinants of linguistic features in key audit matters: Empirical evidence from Europe

Küster

2024

Int J Auditing

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This study investigates the determinants and dynamics of the linguistic features of key audit matters (KAMs) in European countries. Using natural language processing algorithms, including FINBERT, I quantify stylistic and content‐based text characteristics at the KAM level and find that KAM length, readability, sentiment, quantitative density, specificity, the degree of forward‐looking statements, and the extent of boilerplate language are associated with the type of KAM topics, client attributes, and audit firm characteristics. In additional analyses, I also find early empirical evidence of a time trend in these linguistic features. Since their introduction in 2016, KAMs are becoming longer, more quantitative, more specific, but also include more boilerplate phrases. Collectively, the results of the study contribute to a more nuanced understanding of the determinants and dynamics of KAM disclosures.

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Tell Me More: A content analysis of expanded auditor reporting in the United Kingdom

Cited by 23 publications

References 65 publications

Mapping the state of expanded audit reporting: a bibliometric view

Mapping the state of expanded audit reporting: a bibliometric view

Perceived effects of key audit matters reporting on audit efforts, audit fees, audit quality, and audit report transparency: stakeholders’ perspectives

The determinants of linguistic features in key audit matters: Empirical evidence from Europe

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