Published by: British Accounting Review

This study looks at the key audit matters (KAMs) requirement, which is similar to the critical audit matters, or CAMs, requirement from the Public Company Accounting Oversight Board for U.S. auditing firms. The results showed that entity-level KAMs, certain types of individual KAMs and account-level KAMs with a primary impact on a client's profitability and solvency are  more likely to be disclosed when clients face higher levels of financial distress. The usefulness of KAMs in assessing financial distress increased when considering individual  types of KAMs. Going concern, revenue recognition and contingent liabilities KAMs are the most relevant  KAMs for assessing financial distress.

Download