Designing a Model for Identifying Factors Affecting the Readability of Key Audit Matters
Keywords:
Readability of Key Audit Matters, Grounded Theory, Audit Reports, ISA 701 Standards, Linguistic Complexity, Writing Skills, Financial LiteracyAbstract
The purpose of this study is to identify and analyze the factors influencing the readability of Key Audit Matters (KAM) in audit reports. This research was conducted using a qualitative approach and the grounded theory methodology, focusing on the factors that affect users' comprehension and understanding of KAMs. Data were collected through semi-structured interviews with 15 participants, including partners from auditing firms, members of audit committees of companies listed on the Tehran Stock Exchange, and academic experts specializing in audit reporting and disclosure. Data analysis was performed using MAXQDA software and followed three stages of open, axial, and selective coding. Findings indicate that factors such as linguistic complexity and excessive use of technical jargon, auditors' weak writing skills, and constraints imposed by professional requirements and regulatory standards are among the most significant barriers to KAM readability. Moreover, the financial literacy level of report users and the quality of the capital market’s informational environment play a crucial role in the comprehensibility of these matters. Based on these results, the present study offers several recommendations to enhance KAM readability, including a revision of International Standard on Auditing (ISA) 701, strengthening writing skills training for auditors, and developing public financial literacy programs. This research can contribute to improving the transparency of audit reporting and enhancing decision-making quality in financial markets.
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Copyright (c) 2025 Solmaz Mohammad Hosseini Khiavi (Author); Sina Kheradyar; Hosna Ghahremani Saghir (Author)
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