Identification and Disclosure of Key Audit Matters in the Audit Report: Outlook of Iranian

The purpose of the present research is to investigate the outlook of auditors on key auditing matters according to ISA 701. Responses to questionnaires distributed among members of the CPA, indicate that evaluations made by auditors of the basic assumptions that form the basis for recognition and disclosure of financial statement items in the auditor report, the approach taken by the auditor when faced with various risks in the company, accounts with the highest risks of significant fraud including risks of fraud in the auditor report, auditor evaluation of significant events and transactions during the fiscal period as well as matters that hold the highest significance in the financial statements based on the auditor’s judgment have to be identified as key audit matters. From the auditor’s point of view, disclosure of KAM results in enhancement of the informational value of the auditor report and reduction of its uniformity, an increase in professional and legal accountability of the auditor, enhancement of investor decision making, and promotion of audit and financial reporting quality. KAMs differ in and across various industries. Furthermore, auditors believe that disclosure of  KAM results in user perception of a piecemeal opinion issued by the auditor on these matters as well as unacceptability of the unmodified audit opinion issued, diversity in Key Audit Matters due to the differing professional judgments applied by auditors, increase in audit fees, negative impact on the client-auditor relationship, increased pressure by client on the auditor and user perception of the auditor as the original source of information. Auditors have also expressed the necessity of guidelines for the identification and disclosure of KAMs and believe that these matters must be disclosed in paragraphs closest in proximity to the auditor opinion and an appropriate heading must be given to each category.