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Abstrak
This research paper will attempt to thoroughly look at the relationship existing between different corporate governance and audit related variables and the extent of Key Audit Matters (KAMs) disclosure in the reports prepared by external auditors. To determine the influence of the variables of audit committee, the characteristics of the company board of directors, audit fee, type of external auditor, and the length of relationship with the client on the level of disclosures of these pervasive issues is the primary objective of the study. Theoretical Framework and Research Methodology: To effectively achieve its research purpose, an effective multiple regression model was adopted as a statistical instrument to be used in the study. The authors explained closely related relationships between independent variable and the dependent variable of this research using this model: the extent of KAMs disclosure. The model was set on a pilot sample of 283 observations sampled among well defined firms that are listed in Muscat stock exchange. The time frame of analysis is 2016 to 2019. This specific period was selected because it has a direct implication in the transforming world of audit standards that put more emphasis on reporting of KAM. The exact researched independent factors in the current study were: 1) Audit Committee Features: There were also several features of the audit committee-independence related. 2) Audit Committee Independent: This is associated with how much the members of the audit committee operate without the influence of the management. 3) Financial AC Member Expertise: How well the members are knowledgeable in financial matters. 4) Audit Committee Size: The entire committee size, high frequency of committee meetings, and increased amounts of audit fees paid are meager factors that have combined effects of quality and quantity of KAM disclosure. This can be fairly argued in the following way; financial expertise assists the committee members to comprehend hard financial issues, which are well-discussed and are most frequently challenged by way of numerous meeting, elevated audit fees most likely imply that the auditor exerted additional efforts, time and resources in discovering, investigating, and reporting such significant problems. Negative Impact: Conversely, this study found a large negative impact on KAMs disclosure on Board Independence of the company and auditor type. This, surprisingly, perhaps, suggests that greater board independence and the presence of an auditor that is Big Four may actually have riskier outcomes in terms of the disclosed number of KAMs. The adverse effect of the independence of boards of directors could have been reflected in the fact that more independent boards wanted shorter reports or maybe even less positive information in case such information felt too sensitive, and/or damaging. Concurrently, the adverse impact pertaining to the form of external auditor could be associated with a different methodological strategy or strategic decision making that the larger companies used in identifying, evaluating, and reporting Key Audit Matters, perhaps resulting in more summarised or selective reporting style. No Significant Impact: The findings also revealed that there is no significant correlation between the independence of the audit committee, audit committee size, board size, board meetings and number of years that the audit firm has served the client with the extent of the Key Audit Matters are disclosed in the external auditor report. This particular finding suggests that these variables among the parameters of this research were not a significant and observable driver of the degree of KAMs disclosure. This can imply that there is likely to be other contingent or company-specific determinants that will prevail on the possible effects of these governance and tenure traits on KAM disclosure.