Date posted: 29/06/2022

Insights into key audit matters

Joint research into key audit matters (KAMs) reported in Australia in 2021

In brief

  • The majority of auditor’s reports have one or two KAMs
  • There were 54 distinct KAM subject matter areas identified
  • The most frequent KAM subject matter reported was impairment

A new joint report released by CA ANZ, the University of Melbourne and the University of Queensland outlines the frequency and nature of the reporting of key audit matters (KAMs) in auditors’ reports of all ASX listed entities that issued financial statements in 2021 (i.e., those with reporting periods ending from 31 December 2020 to 30 September 2021). 

Some of the key findings are as follows:

  • Auditors report an average of 1.84 key audit matters per audit report. The number of KAMs in an audit report range from a low of 0 through to a maximum of 6.
  • Most audit reports have one or two KAMs and very few report zero or more than four. 
  • There were 54 distinct KAM subject matter areas identified, which suggests a broad range of topics are significant to the audit of a financial report. 
  • The most frequent KAM subject matter was impairment, representing 18% of all KAMs. The next most frequent areas in order were: exploration assets (18%); revenue (12%); business combinations (8%); share-based payments (7%); inventory (4%); intangibles (3%) and provisions (3%). 
  • Topics such as information technology, (which usually involved the implementation of a new IT system), fraud risk (due to risk of fraud in recognition of revenue), related party transactions and funding & liquidity appear less frequently.