Skip to main content

AASB

Research Opportunity – Key Audit Matters Communicated in the Auditor’s Report

October 8, 2021 News

Research Opportunity

Call for Proposals to Research KAM Reporting in 2020 Auditor Reports: Apply by October 31, 2021

Communicating Key Audit Matters: A year post-implementation

With Key Audit Matter (KAM) reporting requirements being in implementation for a year, we are looking ahead to assess what additional guidance may be required to support auditors and other stakeholders who will be communicating KAM for the first time at the 2022 calendar year-end period. 

Our call for proposals

We are issuing a Call for Proposals – seeking research on experience with communicating KAM in the auditor’s report for the 2020 calendar year-end period. 

Our goal is to build on this experience and insights to develop additional guidance for auditors and stakeholders.

Research objectives

We want to understand the following with respect to 2020 experience:

  1. To what extent KAM communications (a) avoided using overly technical terms, (b) were specific to the circumstances of the entity, and (c) avoided the use of boilerplate language
  2. The level of diversity of KAM communications on similar matters in particular industries
  3. The impact, if any, of KAM reporting on investors’ decision-making
  4. The audit committee experience, including benefits and challenges, in working with auditors and management on KAM communications
  5. Whether the KAM reporting process resulted in management changing the disclosures in the financial statements

Research scope

We expect that research may involve two different elements:

  1. Results from a desktop review and analysis of the implementation of KAM communications in a sample of the 2020 auditor’s reports on TSX-listed entities covering objectives 1 and 2. This review and analysis could involve:
    1. evaluating the communicative value and transparency of KAM communications; 
    2. comparing the KAM communications of similar matters within particular industries by different auditors; and/or
    3. identifying features of communicative KAMs.
  2. Surveys and/or interviews covering the following stakeholders and topics:
    1. Investors, such as investment analysts (re: objective 3) could explore:
      1. whether investors are familiar with, and read, the new auditor’s report;
      2. whether investors found KAM reporting to be informative;
      3. the extent to which investors used KAM communications in their decision-making; and/or
      4. investor views on the quality of the audit based on KAM communications (i.e., if there are good KAMs, do investors think that the audit is of higher quality?).
    2. audit committee members (re: objective 4) could explore:
      1. the benefits experienced by audit committees from the KAM reporting process; and/or
      2. the strengths of the KAM reporting process and opportunities for improvements.
    3. preparers (re: objective 5) could explore:
      1. the discussion process that took place between preparers, audit committees, and auditors that led to the communication of KAM in the auditor’s report; and/or
      2. in what circumstances preparers decided to revise disclosures in the financial statements because of discussions of KAM communications with auditors and audit committees.

We welcome expressions of interest from those who can address the full scope of the proposal as well as from those who can address elements of the proposal and are ready to partner with others on the other elements. 

The successful applicant(s) will complete the following:

  • Work in collaboration with AASB staff to finalize the project scope, timing and research methodology, and to recruit interviewees 
  • Review and analyze the results of their research to provide key insights supporting the objectives of the project
  • Meet with AASB staff on a regular basis to discuss research status and share preliminary research results
  • Prepare a research report on the results of the research by May 31, 2022

Please include the following in your proposal:

  • Explanation of why you believe you and/or your research team are well-suited to undertake the research
  • Outline of the research plan including proposed approach
  • Estimate of time required to complete the project and anticipated costs

Related documents

Call for Proposals

Submit your proposal in writing to Karen DeGiobbi no later than October 31, 2021.

Submit