Reducing the Expectation Gap between Auditors and Stakeholders through the Readability of Key Audit Matters

The aim of this study is to identify and explain the factors affecting the readability of Key Audit Matters (KAM) and to present a conceptual model to reduce the expectation gap between auditors and stakeholders. This study was conducted with a mixed approach (qualitative-quantitative) and in the qualitative phase, by using the grounded theory method and conducting semi-structured interviews with 15 experts in the field of auditing and financial reporting (selected through purposive and snowball sampling), the factors affecting the readability of KAM were identified in the form of five dimensions including causal conditions, context, intervening factors, strategies, and consequences. In the quantitative part, the conceptual model extracted from the qualitative analysis was tested by designing a questionnaire and collecting data from 370 auditors, financial analysts, audit committee members, and other professional users of financial statements (using convenience sampling). Data analysis was performed using structural equation modeling and partial least squares (PLS-SEM) approach. The research findings indicate that factors such as regulatory and institutional requirements, company reporting characteristics, level of expertise and knowledge of users, and professional experience of auditors, through strategies such as simplifying the language of the report, standardizing the writing format, utilizing new technologies, and promoting professional education, have a significant impact on improving the readability of key audit matters. Finally, the results show that increasing the readability of KAM, as a mediating variable, can play an effective role in reducing misconceptions, promoting transparency, increasing public understanding, and improving stakeholder trust, and thus leading to a reduction in the expectation gap between auditors and users of audit reports. The final conceptual model of the research can be used by professional bodies, policymakers, and audit firms as a practical basis for developing standards, regulatory policies, and designing training programs to improve the quality and effectiveness of audit reporting.