الفهرس 
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Abstract
This study is exploratory in nature and provides early evidence on the application of KAM reforms in Egypt. The study aims at exploring the applications of new expanded audit report ISA701 KAM requirements in the Egyptian context. The current study started with a comprehensive review of the relevant literature regarding the new KAM reform requirements and the audit-client negotiation conflict situations to achieve this aim. The research gap showed that the current auditing literature was scarce regarding the impact of the client’s management style on the auditor reporting choice regarding KAMs. Previous research on the expanded audit report was limited to its impact on audit quality (Booklay and Quick, 2016), the informational value of the new KAM reporting requirement and capturing the stakeholders reactions regarding the new expanded audit report. It was revealed according to the auditing literature that there are some behavioral and environmental factors that impact the KAM decision making process; auditor characteristics (experience, gender, position), client characteristics (management style) and some environmental characteristics such as the engagement risk and the retention risk.
The current research narrows this research gap through considering the auditors characteristics (experience) and the client characteristics (contentious/collaborative) which would have an impact on the KAM reporting decision in the new expanded audit report. The experimental study was conducted on 218 Egyptian auditors with different levels of experiences and positions in the audit firms.
The experiment was conducted with several auditors(junior auditors, audit seniors, deputy audit managers, audit managers, partners), with experience exceeding two to five years working in Big 4 , non-Big 4 with international affiliations and other small audit firms. Audit firms in Egypt follow the Egyptian Standards on Auditing and Egyptian Accounting standards, which are translated versions of the ISAs and IFRS. Those firms were aware of the changes in ISAs and the related implications as they are international affiliation of audit networks that had been affected by those new audit reporting requirements in different jurisdictions.
The experimental instrument was divided into four sections, starting with an overview of the experiment to gain better understanding of how audit partners/ managers/auditors interact with their clients to resolve complex issues during the course of the audit. It involved a hypothetical case of an interaction between auditors and the CEO/CFO of a hypothetical company to resolve reporting of a complex estimate regarding a warranty provision for defective units that varied between the four groups of subjects. The third section included the choice of action concerning disclosing Key Audit Matters regarding warranty provision in the audit report, and the auditors are required to decide the level of KAM disclosures after reading the case carefully. The last section included some demographic questions.
5.2 Conclusion:
Egyptian-listed entities and their auditors have viewed this bold move by the regulators, a demonstration of sound belief in the principles associated with increased transparency with a view to greater investor confidence. On the other hand, any pitfalls and unintended consequences may be materially felt, and if this is the case, the effect may be harder-hitting as a result of the entities being listed than potentially would have been had the regulator considered a more dry runs, such as requiring a sample of non-listed entities first.
The findings of the experiment revealed the following:
i) There was consensus among the experienced auditors that the client pressure (i.e., contentious behavior) has no significant impact on the level of KAM disclosures in the audit report
ii) The in-experienced auditors perceived a significant impact of the client’s pressure on the extent of KAM disclosures in the audit report with lower scores. The results provide support for the prediction that the client’s behavior would positively impact the extent of disclosures in the audit report.
iii) The auditor’s experience has a positive significant impact on the level of KAM disclosures when the client negotiating style is contentious.
iv) Auditors with lower experience, perceived communication outcome are marginally low with contentious client behavior rather than a collaborative client. Whereas, auditors with greater negotiation experience, perceived communication outcome perceived to be higher with client pressure. The professional qualifications is the only control variable that showed significant effect on the auditor’s reporting choice
5.3 Further Research:
In reaching this conclusion, it must be noted that this study is not without limitations. It concentrates in an exploratory fashion only on the KAM introduction in Egypt to inform the ongoing debate. There are significant opportunities for research in Key Audit Matters reporting requirements. The researcher calls future research to examine the following:
1- The advantages and disadvantages of the introduction of equivalent legislative in other jurisdictions and compare it to the potential consequences in Egypt.
2- Empirical analysis to investigate consequences and the negative impact on the auditing profession after the introduction of the KAM in Egypt.
3- Subsequent work may expand on this research in a different pattern for example, by creating a model to predict future costs of KAM implementations.
4- The role of other corporate governance bodies, like audit committees, and how their composition and strength may affect the KAM reporting process.
5- The experiment used in this research could be carried out in a variety of cultural settings.