THE NATURE IN REPORTING OF THE KEY AUDIT MATTER (KAM): THE JUDGMENT IN WRITING KEY AUDIT MATTER OF CERTIFIED PUBLIC ACCOUNTANT FROM BIG FOUR ACCOUNTING FIRMS

Abstract

The purposes of this research were 1) to study the problems of the key audit matter (KAM) in the auditor report 2) to study KAM format and techniques of the auditors 3) to study the trends on how to write KAM of the auditors and 4) to study the expected benefits on writing KAM of the auditors.A total of 119 participant auditors from big four accounting firms filled their questionnaire. Reliability test result using Cronbach’s alpha was 0.92. 150 questionnaires were send and 119 returned which equaled to 79.3 percent. The study results showed that 1) The problem of writing KAM of the auditors was the difficulty in auditor’s professional judgment (40.3 percent), issues relating to the risks (15.1 percent), ambiguous estimation (8.4 percent), complexity (6.7 percent), and more than 2 issues (22.7 percent).2) KAM format and techniques of the auditors that write KAM headings together with the description of how the auditor’s approach to audit such matter (54.6 percent), explain how’s the audit procedures performed with respect to the matter (32.8 percent), report auditor’s KAM by summarizing into a table (5.0 percent). 3) The trend of writing KAM of the auditors was that the auditors determine the most significant matter to write updated key audit matters of the current period (34.5 percent), refer to previous year (2016) (26.1 percent), indecisive (12.6 percent), and, the auditors may study from global trend (7.6 percent). 4) The study results of the expected benefits on writing KAM revealed that in the auditors’ view, to help the auditors expressed their confidence in giving auditor’s opinion (56.3 percent), to help the auditors to propose suggestions about deficiencies in internal control to a company (12.6 percent), tends to help the auditors to reduce audit risk (10.9 percent).