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Disclosure of Key Audit Matters and Audit Fee: The Moderating Effect of Firm Risk
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Mohsen Khotanlou   , Mahdi Kazemioloum * , Mostafa Abdi , Hosain Bakhtari |
| Assistant Prof, Department of Accounting, Faculty of Economic and Social Science, Bu-Ali Sina University, Hamedan, Iran. Corresponding Author Email: m.kazemiolum@basu.ac.ir |
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Abstract: (216 Views) |
| This research aims to examine the relationship between the disclosure of Key Audit Matters (KAMs) and audit fees, as well as the moderating effect of firm risk on this relationship. To assess the impact of KAM disclosures on audit fees and the interactive effect of firm risk, data were collected from 124 companies listed on the Tehran Stock Exchange from 2017 to 2022. The study employed archival methods and tested the research hypotheses using panel data analysis and multiple regression techniques. The findings reveal that the disclosure of KAMs has a positive significant impact on audit fees. Specifically, the results indicate that firm risk positively and significantly moderates the relationship between KAM disclosures and audit fees. Also, firm risk increases the positive effect of disclosure of key audit matters on audit fees. This suggests that auditors tend to exert additional effort and incur higher costs when disclosing KAMs, which are passed on to clients through increased audit fees. The findings show that in high-risk firms, auditors need more effort to reduce the possibility of mistakes; this effort leads to an increase in the audit fee. The findings of this research offer valuable insights for standard-setters, helping them to review and better understand the effectiveness of new auditing standards, particularly the International Standard on Auditing (ISA) 701. |
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| Keywords: Audit Fees, Auditing 701 Standard, Firm Risk, Key Audit Matters. |
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Full-Text [PDF 1105 kb]
(123 Downloads)
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Type of Study: Research |
Subject:
Auditing
Received: 2024/08/25 | Accepted: 2024/12/24 | Published: 2025/10/2
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