Original Research - Special Collection: Corporate Governance

An analysis of key audit matter disclosures in South African audit reports from 2017 to 2020

Dusan Ecim, Warren Maroun, Alan Duboisee de Ricquebourg
South African Journal of Business Management | Vol 54, No 1 | a3669 | DOI: https://doi.org/10.4102/sajbm.v54i1.3669 | © 2023 Dusan Ecim, Warren Maroun, Alan Duboisee de Ricquebourg | This work is licensed under CC Attribution 4.0
Submitted: 11 October 2022 | Published: 31 January 2023

About the author(s)

Dusan Ecim, School of Accountancy, Faculty of Commerce, Law and Management, University of the Witwatersrand, Johannesburg, South Africa
Warren Maroun, School of Accountancy, Faculty of Commerce, Law and Management, University of the Witwatersrand, Johannesburg, South Africa
Alan Duboisee de Ricquebourg, Department of Accounting and Finance, Leeds University Business School, University of Leeds, Leeds, United Kingdom


Purpose: The aim of this study was to analyse the key audit matters (KAMs) being reported in South Africa by assessing 356 Johannesburg Stock Exchange (JSE)–listed entities’ audit reports from 2017 to 2020, which entailed 1424 audit reports and 2903 KAM disclosures.

Design/methodology/approach: The study assessed the impact and inter-relationship of three determinants (financial year, audit firm type and industry category) on the type of KAMs disclosed, total KAMs disclosed, the number of entity- and account-level KAMs and the readability of KAM disclosures. Qualitative content analysis was used to identify the core KAM themes and classifications.

Findings/results: The findings suggest the most common KAM disclosures are related to business combinations and impairments of goodwill, followed by measurement and impairment considerations for nonfinancial assets. Key audit matters disclosed predominantly have a micro-level focus on core account-level issues. Differences in KAM disclosures between Big 4 and non-Big 4 firms are not that pronounced, which signals an increased market credibility perception for second-tier firms. The Flesch average reading score indicates that KAM disclosures are complex and difficult to read. This is concerning because the KAM disclosures are in place to facilitate greater transparency for stakeholders. However, the technical nature of financial statements may mean that only users with an understanding of accounting, finance and economics will derive value from KAM disclosures.

Practical implications: This research will be relevant for standard-setters, regulators and users of audit reports interested in how ISA 701 is being implemented and the state of KAM disclosures in an emerging economy.

Originality/value: Barring only some exceptions, relatively little is known about the auditors’ expanded reporting requirements in a South African context.


Key audit matters (KAMs); audit firms; expectation gap; information asymmetry; audit reports

JEL Codes

M30: General

Sustainable Development Goal

Goal 8: Decent work and economic growth


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Crossref Citations

1. How auditors identify and report key audit matters - An organizational routines perspective
Warren Maroun, Alan Duboisée de Ricquebourg
The British Accounting Review  first page: 101263  year: 2023  
doi: 10.1016/j.bar.2023.101263