Exploring the impact of key audit matters on audit report lag: insights from an emerging market

Oct 3, 2026

Purpose– this study examines how key audit matters (KAMs) affect the timeliness of financial statement reporting in Kuwait, using audit report lag (ARL) as the measurement. Design/methodology/approach – A panel of 136 unique firms and 841 firm-year observations from 2016–2022 is analyzed via a random effects model, with sub-sample analysis and two-stage least squares (2SLS) regression. Findings – More disclosed KAMs are associated with longer ARL, and certain KAM categories (e.g., investments, new standards) significantly delay reporting. Originality/value – It provides early insights on both the number and specific types/categories of KAMs in emerging markets.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages18

Reading Time45 min

AccessFree to download

Abstract

Purpose

Design/methodology/approach

Findings

Originality/value

Introduction

Background and prior literature

Context of Kuwait and governance framework

The current issue and full text archive of this journal is available on Emerald Insight at: [https://www.emerald.com/insight/2054-6238.htm](https://www.emerald.com/insight/2054-6238.htm) JEAS 42,3 842 Received 19 January 2024 Revised 25 April 2024 16 June 2024 30 July 2024 19 August 2024 Accepted 23 August 2024 Journal of Economic and Administrative Sciences Vol. 42 No. 3, 2026 pp. 842-859 © Emerald Publishing Limited 2054-6238 DOI 10. 1108/JEAS-01-2024-0013 Exploring the impact of key audit matters on audit report lag: insights from an emerging market Abdullah Alawadhi, Abdulrahman Alrefai and Ahmad Alqassar Department of Accounting, College of Business Administration, Kuwait University, Kuwait City, Kuwait Abstract Purpose–The purpose of this study is to examine the impact of key audit matters (KAMs) on the timeliness of financial statement reporting, measured as audit report lag (ARL), within the context of Kuwait’s evolving financial market. Design/methodology/approach – Using a sample of 136 unique firms and 841 firm-year observations over the period 2016–2022, the study employs a random effects model on a panel data set to examine the correlation between the number and type of KAMs disclosed in audit reports and the length of ARL. In addition, we employ sub-sample analysis and two-stage least squares (2SLS) regression to enhance overall reliability. Findings – The results indicate a positive relationship between an increased number of reported KAMs and the length of ARL. Specific categories of KAMs, such as those related to investments and the implementation of new standards, also significantly impact the delay. Additionally, the findings reaffirm the importance of several determinants of ARL, which is consistent with prior research. Originality/value – This study is among the first to offer new insights by examining the relationship between both the number and specific types and/or categories of KAMs on ARL in emerging markets. Keywords Audit report, Key audit matters, Financial reporting timeliness, Audit report lag, Corporate governance, Emerging markets Paper type Research paper Introduction Financial statements are instrumental for management to convey a company’s financial health and operational outcomes to shareholders (Abdillah et al., 2019). These statements are not only a reflection of managerial performance but also serve as an accountability metric, enabling shareholders to assess the returns on the resources allocated to management. Recognizing the importance of transparency and the need for deeper shareholder engagement, the International Auditing and Assurance Standard Board (IAASB) introduced Key Audit Matters (KAMs) [1]. These KAMs prompt auditors to deliver more detailed reports by providing supplementary insights from their auditing endeavors (IAASB, 2013; IAASB, 2015). Recent years have witnessed a growing body of literature on auditing, with an emerging focus on the influence of these KAMs on audit reports. While KAMs have been correlated with factors like audit fees and quality, findings on these relationships have varied across different national contexts (Gold and Heilmann, 2019; Kitiwong and Sarapaivanich, 2020) . Simultaneously, the timeliness of financial statements has gained importance, especially given its crucial role in maintaining efficient capital markets (Fujianti and Satria, 2020) . Timely disclosures enhance the reliability of financial data and contribute to liquid and efficient markets by enabling investors to make investment decisions (Fung, 2014; Raweh et al., 2021) . However, delays can create information asymmetry, agency conflicts, market inefficiency (Akhalumehetal., 2017), and have substantial influence on stock markets (Ittarat and Tangpinyoputtikhun, 2019) . Additionally, Toumi et al. (2022) highlight that cultural dimensions influence audit timeliness across countries, which is particularly relevant for understanding audit repo

FAQs

What is the main research purpose regarding key audit matters and audit report lag?

The study examines how key audit matters influence the timeliness of financial statement reporting, measured by audit report lag, in Kuwait’s evolving financial market.

How is the empirical analysis conducted in the study?

The study uses 136 unique firms and 841 firm-year observations from 2016–2022. It applies a random effects panel model, supported by sub-sample analysis and two-stage least squares (2SLS) regression.

What relationship does the study find between reported KAMs and audit report lag?

It finds a positive relationship: an increased number of reported KAMs is associated with longer audit report lag. Certain KAM categories, especially those related to investments and new standards, also significantly affect delay.

Oct 3, 2026

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