Title: Key audit matters and audit rotation effects on audit report delays

Authors: Maria Tsipouridou

Addresses: Division of Business Administration, Department of Economics, Aristotle University, Thessaloniki, 54 124, Greece

Abstract: This study examines the impact of key audit matters (KAMs) and audit firm or partner rotations on audit reporting delay. The results reveal that more KAMs are associated with extended audit report issuance delays. Audit delays are particularly prolonged when new KAMs are introduced in the current year compared to the prior year and when auditors address account-level rather than entity-level KAMs. Additionally, audit delays are longer when auditors handle complex areas such as restructuring, exceptional items, investments, property, plants and equipment, and pension issues. The findings also indicate that both audit firm and partner rotations are positively associated with audit report delays, with the impact of audit firm rotation being more pronounced. These results provide empirical evidence that increased audit effort and rotation incurs costs for investors and other stakeholders.

Keywords: audit report delay; key audit matters; KAMs; audit firm rotation; audit partner rotation.

DOI: 10.1504/IJBAAF.2024.144601

International Journal of Banking, Accounting and Finance, 2024 Vol.14 No.4, pp.443 - 478

Received: 16 Oct 2024
Accepted: 09 Dec 2024
Published online: 24 Feb 2025 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article