The Effect of Disclosing key audit matters in the Audit Report on Investor's Decisions: AField Study in Egypt

نوع المستند : المقالة الأصلية

المؤلفون

1 كلية التجارة جامعة حلوان

2 کلية التجارة - جامعة حلوان

المستخلص

This research aims, first, to examine the reactions of investors, auditors, and other interested parties to the audit report using modified auditing standards, which consist of disclosure of audit risks through the key audit matters paragraph (KAMS) as mandated by ISA 701. In addition to investigating whether the KAMS disclosure has a positive effect on narrowing gaps between what the auditor produced and what investors need, we will analyze the practices of applying the requirements of ISA 701 in Egypt, evaluate the potential need for adjustments or enhancements in auditing and reporting standards, and explore whether the presence of audit risks in the KAMs paragraph influences investors to adjust their risk assessments for the right investment decisions.The theory that’s used in this research is signaling theory, which is applied to explain the relationship between audit risk disclosure and investor’s reactions.The study used a simple random sample, and data was obtained from the sample respondents of 384 observations based on the equation of Thompson, Stephen, as larger studies give stronger and more dependable results since they have narrower margins of error and lower standards of deviation. This study was applied to academic staff members, auditors, accountants, and investors to achieve the objectives of the study.Our result suggests that the mandate of KAM’s disclosure has positive effect on the decision of Egyptian investors Also, updated information content in the auditor reports, including key audit matters paragraphs, has a great impact on narrowing gaps between the auditor and the investors.

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