the Relationship Between Audit Firms’ Structural Characteristics And Key Audit Matters (KAMs) Readability

Tanani, Mohsen; farajzadeh dehkordi, hassan; aeini, saeed

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the Relationship Between Audit Firms’ Structural Characteristics And Key Audit Matters (KAMs) Readability

Mohsen Tanani ^*¹

, Hassan Farajzadeh dehkordi²

, Saeed Aeini³

1- Assistant Prof., Department of Accounting, Faculty of Financial Sciences, Kharazmi University, Tehran, Iran. (Corresponding Author) , M.tanani@khu.ac.ir
2- Assistant Prof., Department of Accounting, Faculty of Financial Sciences, Kharazmi University, Tehran, Iran, Ha.dehkordi@khu.ac.ir
3- MSc. Student, Department of Auditing, Faculty of Financial Sciences, Kharazmi University, Tehran, Iran Aeinisaeed1378@gmail.com

Abstract: (35 Views)

In recent years, various criticisms have been raised regarding the quality of audit reports, including insufficient attention to their informational role and a decline in their overall reliability. To address these concerns and enhance transparency as well as public trust, Auditing Standard No. 701 was issued by the Audit Organization in 2021 and became mandatory in 2022. One of the essential aspects of audit quality is the readability of reports, particularly the Key Audit Matters (KAMs), which can significantly expected to be associated with users’ understanding. Accordingly, the aim of this study is to examine the factors affecting the readability of KAMs disclosed in independent audit reports.
For this purpose, independent audit reports of 118 companies listed on the Tehran Stock Exchange and Iran Fara Bourse over the past two years were analyzed. The readability of KAMs was measured using the Flesch Reading Ease Index, and data related to audit firm characteristics—including firm type, auditor gender, auditor tenure, and audit fees—were collected. Multiple regression analysis was then employed, controlling for variables such as profitability and audit committee structure.
The findings indicate that while most individual and institutional auditor characteristics do not have a significant impact on readability, two factors—namely the type of audit firm and auditor tenure—play a meaningful role. Specifically, the presence of state-owned audit firms improves readability, whereas frequent auditor changes reduce it. These results can be explained within the framework of agency theory and information asymmetry and bear noteworthy implications for audit practice and policymaking.

Keywords: Agency relationship, Assurance, Auditing, International auditing standard No.701. Key audit matter

Type of Study: Applicable | Subject: Special
Received: 2025/08/31 | Accepted: 2026/03/1

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