Do Partners Have Unique Reporting Styles for Key Audit Matters?

• In Event: Expanded Audit Reports

Abstract

We examine whether audit partners have unique styles for key audit matter (KAM) reporting. We further investigate whether such differences may yield variation in audit fees and report lag. We develop a conceptual model that helps to motivate our expectation that KAM reporting styles at the individual audit partner level will reflect idiosyncratic differences across partners. We use an archival sample of European KAMs, and include fixed effects for audit partner-level and audit firm-level differences. We find within-partner similarities and between-partner differences in KAM reporting volume across clients, while controlling for variation in client and audit firm characteristics. We also find that particularly distinctive partner KAM reporting styles are positively associated with audit pricing and report lag, such that these partners charge on average 18 percent higher audit fees and take about nine days more to sign the audit report as compared to partners with less-distinctive KAM reporting styles.

Authors

• Linette M Rousseau, University of Wisconsin-Madison

• Karla M. Zehms, University of Wisconsin-Madison