Research on the influence of key audit matters on the audit quality of commercial banks-Evidence from China

In this paper, multiple linear regression model is used to predict and test the effect of audit policy changes in the capital markets. In 2016, China issued a new reporting guideline which included the addition of key audit matters (KAMs) as the core focus. It was required that all A+H-share companies should implement these in their reporting in 2017, as well as all domestic listed companies in 2018. In order to study the impact of the KAMs standard on the audit quality of Chinese commercial banks, we analysed the KAMs as disclosed by commercial banks as well as any further change in audit quality at these banks before and after implementation of the new auditing reporting standards. The results show that the disclosure of KAMs significantly promotes the improvement of loan impairment provisions in commercial banks, thus inhibiting potential earnings manipulation by management and improving the quality of financial information. The level of loan impairment provision plays an intermediary role in the improvement of bank audit quality in the new reporting standards. © 2023 Xiaoyan Wei et al., published by Sciendo.