The Impact of Auditor Rotation on Key Audit Matters (KAM)

Abstract

One of the measures that emerged within the scope of the European audit reform was the report of key audit matters (KAM) with the objective of providing greater transparency in the auditor's reports. In 2015 the International Auditing and Assurance Standards Board (IAASB) approved the international standard on auditing (ISA) 701- Communicating KAM in the independent auditor's report. This chapter aims to analyse the evolution of the KAM report, in companies listed on Euronext Lisbon, from 2016 to 2019, and the impact of auditor rotation on that report. For this purpose, a mixed methodology was used with the KAM categorization followed by descriptive statistics. Through the research developed about the evolution of the report, it has been concluded that there was a decrease in the number of KAM reported during the period and that the majority of KAM reported each year are reported again in the following year. Regarding the impact that the audit firm change may have on KAM report, it was not possible to make a direct relationship between the audit firm change and KAM report.