Research: Cost and Benefits of Key Audit Matter Reporting

Dr. Fred Pries FCPA FCA

Sandra Scott CPA CA










CPABC member Dr. Fred Pries, PhD FCPA FCA, associate professor emeritus, and Sandra Scott CPA CA, associate professor, both of the University of Guelph, have recently published a research paper, “Cost and Benefits of Key Audit Matter Reporting for Smaller Public Entities: The Australian Experience.”

The purpose of this analysis is to gather evidence regarding the cost and benefits of key audit matter (KAM) reporting for smaller public entities.  Pries and Scott examined 362 Australian listed entities with year ends between December 15, 2016 and December 15, 2017 and with market capitalization of less than AUD$10 million.

They found no significant impact on audit fees with the introduction of KAM reporting for the entities examined.  They also found that KAM reporting provided an effective “signal” to readers of the key audit issues that arose.  However, in certain situations, they found that KAM reporting did not provide “transparency” about those key audit issues.

Based on the Australian experience, Pries and Scott conclude that there is value to KAM reporting by smaller listed entities and that the value could be increased if KAM reporting were more transparent.

The paper can be download from the University of Guelph website.

Dr. Pries will deliver a research brief on this research at the CPAEF Accounting Academic Symposium in May 2019 in Vancouver.



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