The relationship between dimensions of audit quality and key audit matters: A study on companies listed in the BIST 100 index

Independent audit standards play an important role in ensuring the quality of audit processes and, consequently, in maintaining the stability and reliability of the economic system. The purpose of Independent Auditing Standard (IAS) 701 "Communicating Key Audit Matters in the Independent Auditor's Report" is to enhance the transparency and communication value of independent audit reports. This standard includes principles and rules regarding the disclosure of key audit matters, which are determined based on the auditors' professional judgment, in audit reports. Since key audit matters are determined according to the auditors' professional judgment, they can be influenced by various factors. Effectively managing the process of disclosing these matters in independent auditor reports contributes positively to the quality of the audit by increasing transparency. Therefore, identifying the factors that influence key audit matters is of great importance. The primary aim of this study is to determine the direct and indirect effects of certain indicators of audit quality on key audit matters disclosed in auditor reports within the scope of IAS 701. In other words, this study analyzes how certain factors related to audit quality affect the determination of key audit matters. In this context, the dataset of the study consists of data obtained from the independent auditor reports and annual reports of companies listed in the Borsa Istanbul (BIST) 100 index. Structural Equation Modeling (SEM) was used to test the data in line with the study's objective. According to the findings obtained from the analysis, a negative significant relationship was found between the size of the audit firm and key audit matters, while a positive significant relationship was identified between the audit committee of the audited company and key audit matters. Additionally, a positive significant relationship was found between the size of the audit firm and the audit committee, which was determined as a mediating variable. A negative significant relationship was found between the auditor's industry expertise and the audit committee. Furthermore, the variables of audit firm size and audit fee were found to have a positive significant relationship with key audit matters through the audit committee. It was also determined that the auditor's industry expertise has a negative significant effect on key audit matters through the audit committee.