External Audit Reporting in Malaysia: An Exploratory Analysis on Key Audit Matters

The ISA 701 Standard, Communicating Key Audit Matters in the Independent Auditors' Report, requires external auditors to report issues that are considered to be major during audit work. This standard, which effective on 15 December 2016, is the latest standard with regards to the independent auditor's report. This study examines the features of key audit matters reported after the ISA 701 was issued and investigates how the key audit matters were reported, particularly among going concern problem companies that received unqualified auditor's reports and companies that received qualified auditor's reports. Using convenience sampling method, this study analyses 99 key audit matters from 46 random samples of listed companies in Bursa Malaysia from 2016 to 2018, overall findings show that the key audit matters were reported in generic with similar focus. However, further analyses indicate that significant differences in the disclosure of the key audit matters between the unqualified audit reports with material uncertainty of going concern issue and qualified audit reports. The findings of this exploratory study provides an overview for policymakers, auditors, users of financial statements and students in understanding the key features of the audit report after ISA 701 was issued particularly among going concern problem companies that received unqualified auditor's reports and companies that received qualified auditor's reports.