Research On The Quality Of Auditors Disclosing KAM

In order to keep the international convergence and be affected by the domestic capital market environment,the Ministry of Finance of my country issued the No.1504 Key Audit Matters Standards at the end of 2016,and implemented it in batches to to deliver more practical information that is conducive to decision-making for the majority of users.At present,it has been four years that listed companies in our country have used audit reports to conduct comprehensive communication on key audit matters.Most of the existing literature uses key audit matters(referred to as KAM)as independent variables to study the economic consequences of it,which shows that it certainly has a information content.However,whether it can continue to have a positive effect and continue to bring sufficient and valuable important information to users depends on its quality.Thus,it is worthwhile to study the quality of auditors’ disclosure of key audit matters.Based on three major theories and the state of the literature review,this paper propose the quality analysis framework of KAM,and gives an overview of its domestic and international development.As the KAM has obvious industry and company characteristics,it carries out overall and specific research from two levels of industry and company according to the proposed analysis framework: The cultural media industry has the distinguishing feature of light assets,overhead money invested,high risk and high revenue.It is often easy to generate huge goodwill in the process of mergers and acquisitions,and its income is also easily affected by macro regulatory policies.At the same time,accounting information processing in this industry always involves significant management judgments.If this highly subjective judgment is inaccurate or intentionally manipulated,the quality of the accounting information ultimately delivered to the user will be compromised.In order to prevent this phenomenon from happening in the cultural media industry,under the condition of the full implementation of Standard No.1504,auditors should communicate relevant information to users through key audit matters as much as possible without affecting the audit opinion to protect the rights of users.Therefore,it selects the cultural media industry as the research object at the industry level,uses the descriptive statistics method to conduct a large sample analysis of the status quo of key audit matters of 56 listed companies in the cultural media industry from 2017 to 2020,finds common problems in the industry and briefly analyzes its causes.After that,select Hualu Baina,which has a large difference in the types of disclosure of KAM in consecutive years,as a case,in-depth analysis of the quality of the KAM disclosed by auditors,find problems in the implementation of the standards,and then analyze its reasons and come up with solutions.By focusing on the cultural media industry and Hualu Baina,this paper draws the following conclusions:(A)From the perspective of the industry,first of all,the disclosure elements of key audit matters are relatively standardized and complete,and the number of tabular disclosures has increased year by year,but the audit response lacks conclusive evaluation,and the overall comprehension of the disclosed matters needs to be enhanced.Second,although the overall number of disclosures in2017-2020 remained largely stable,the number of disclosures was still small.The types of disclosed events can reflect the industry characteristics of the cultural media industry,but they are too concentrated on matters such as impairment of goodwill and impairment of accounts receivable,and less disclosure of major transactions or events in the current period.Finally,the homogeneity of the key audit matters disclosed between 2017 and 2020 is serious,and the incremental information provided continuously is relatively small,as shown in the repetition of the types of matters disclosed in each year as high as 75%,and the similarity of description texts exceeds60%.(B)From the perspective of the company,although the standards and guidelines emphasize individualized disclosure,auditors lack sufficient personal ability and experience to understand and in-depth the standards.At the same time,their perception of risks and responsibilities has increased.In addition,accounting firms have not encouraged and supported the disclosure of KAM of different types.And the quality supervision of market regulators has not been perfect.As a result,auditors follow the herd in order to avoid risks and responsibilities,and ultimately lead to the problems of too few disclosed key audit matters,insufficient intelligibility and insufficient value of the information provided continuously.Therefore,it fails to continuously bring effective incremental information to the intended users.To this end,it makes recommendations from three aspects of auditors,accounting firms and regulators,so as to form a multi-party synergy to ensure the quality of auditors’ disclosure of key audit matters.