Associations between the financial and industry expertise of audit committee members and Key Audit Matters within related audit reports

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Associations between the financial and industry expertise of audit committee members and Key Audit Matters within related audit reports. / Velte, Patrick.
In: Journal of Applied Accounting Research, Vol. 21, No. 1, 10.02.2020, p. 185-200.

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@article{fc0ea06da1674f6282cae11fc8a76a67,
title = "Associations between the financial and industry expertise of audit committee members and Key Audit Matters within related audit reports",
abstract = "PurposeThe purpose of this paper is to focus on audit committees{\textquoteright} financial and industry expertise (FIE) and their impact on the readability of key audit matters (KAMs).Design/methodology/approachBased on an agency-theoretical framework, analyses are conducted of data from a sample of UK premium listed companies for the fiscal years 2014–2017 (i.e. 1,319 firm-year observations). Correlation and regression analyses are conducted to evaluate possible associations between FIE in audit committees and KAM readability. The author relies on popular readability measures (Flesch Reading Ease and Fog Index).FindingsAudit committees{\textquoteright} FIE and KAM readability are positively connected. Combined FIE also has a stronger effect than either financial or industry expertise alone.Research limitations/implicationsCompanies, regulators and researchers could be significantly affected by the finding that audit committees{\textquoteright} FIE can have a considerable impact on KAM readability.Originality/valueThe analysis of the link between audit committees{\textquoteright} FIE and KAM readability makes a contribution to prior empirical research on KAM.",
keywords = "Management studies, Audit committees, External audit, industry expertise, financial expertise, Key audit matters, auditor reporting, M410, M420",
author = "Patrick Velte",
year = "2020",
month = feb,
day = "10",
doi = "10.1108/JAAR-10-2018-0163",
language = "English",
volume = "21",
pages = "185--200",
journal = "Journal of Applied Accounting Research",
issn = "0967-5426",
publisher = "Emerald Publishing Limited",
number = "1",

}

RIS

TY - JOUR

T1 - Associations between the financial and industry expertise of audit committee members and Key Audit Matters within related audit reports

AU - Velte, Patrick

PY - 2020/2/10

Y1 - 2020/2/10

N2 - PurposeThe purpose of this paper is to focus on audit committees’ financial and industry expertise (FIE) and their impact on the readability of key audit matters (KAMs).Design/methodology/approachBased on an agency-theoretical framework, analyses are conducted of data from a sample of UK premium listed companies for the fiscal years 2014–2017 (i.e. 1,319 firm-year observations). Correlation and regression analyses are conducted to evaluate possible associations between FIE in audit committees and KAM readability. The author relies on popular readability measures (Flesch Reading Ease and Fog Index).FindingsAudit committees’ FIE and KAM readability are positively connected. Combined FIE also has a stronger effect than either financial or industry expertise alone.Research limitations/implicationsCompanies, regulators and researchers could be significantly affected by the finding that audit committees’ FIE can have a considerable impact on KAM readability.Originality/valueThe analysis of the link between audit committees’ FIE and KAM readability makes a contribution to prior empirical research on KAM.

AB - PurposeThe purpose of this paper is to focus on audit committees’ financial and industry expertise (FIE) and their impact on the readability of key audit matters (KAMs).Design/methodology/approachBased on an agency-theoretical framework, analyses are conducted of data from a sample of UK premium listed companies for the fiscal years 2014–2017 (i.e. 1,319 firm-year observations). Correlation and regression analyses are conducted to evaluate possible associations between FIE in audit committees and KAM readability. The author relies on popular readability measures (Flesch Reading Ease and Fog Index).FindingsAudit committees’ FIE and KAM readability are positively connected. Combined FIE also has a stronger effect than either financial or industry expertise alone.Research limitations/implicationsCompanies, regulators and researchers could be significantly affected by the finding that audit committees’ FIE can have a considerable impact on KAM readability.Originality/valueThe analysis of the link between audit committees’ FIE and KAM readability makes a contribution to prior empirical research on KAM.

KW - Management studies

KW - Audit committees

KW - External audit

KW - industry expertise

KW - financial expertise

KW - Key audit matters

KW - auditor reporting

KW - M410

KW - M420

UR - http://www.scopus.com/inward/record.url?scp=85073936076&partnerID=8YFLogxK

U2 - 10.1108/JAAR-10-2018-0163

DO - 10.1108/JAAR-10-2018-0163

M3 - Journal articles

VL - 21

SP - 185

EP - 200

JO - Journal of Applied Accounting Research

JF - Journal of Applied Accounting Research

SN - 0967-5426

IS - 1

ER -