The Impact of Adopting International Standard on Auditing No.701 on Transparency of Financial Reports

Abstract

This research aims to analyze the application of International Standard on Auditing (ISA) 701, the communication of key audit matters, and the resulting impact on the transparency of financial reporting. By examining the actual application of this standard, it is evident that the disclosure of key audit matters (KAM) significantly enhances the clarity and transparency of financial reporting. This disclosure helps investors and stakeholders better understand the challenges and risks related to the company, increasing confidence in financial reports and auditors.

This standard also contributes to improving communication between auditors, management, and governance stakeholders, reducing misunderstandings and enhancing mutual trust. By disclosing key matters, ambiguity and conflicts in financial information can be reduced, facilitating informed decisions based on accurate and reliable information.

The research makes recommendations, including providing training programs for auditors, strengthening communication channels between auditors and management, improving financial reporting, promoting transparency, periodically reviewing and updating accounting policies, and finally encouraging auditors to share feedback with management to improve the quality of financial reporting.