Key audit matters in the auditor's reports on the example of European mining companies

has become a starting point to take the issue into consideration in the
international literature on possibilities to limit an audit expectation gap
i.e. an information expectation gap with regard to an audit. Its partial
limitation has become possible owing to a new audit reporting which
should be a valuable source of independent information for
stakeholders with Key Audit Matters (KAMs). They are the issues most
significant while auditing a financial statement of a given company for
a current period. The higher number of KAMs revealed by a statutory
auditor may suggest a higher number of problem areas in an audited
company's activity.
This paper aims to determine the factors that influence the number of
KAMs that auditors disclose in their audit reports on the financial
statements of European mining companies. Sixty-two companies from
the mining industry, listed on European stock exchanges and taken into
consideration on the ORBIS basis, were taken for the research sample.
The content analysis included financial statements and statutory
auditors’ reports for the year 2019. The authors formulated the main
hypotheses, according to which: The number of KAMs reported in the
auditor's reports from auditing the financial statements of mining
companies is positively associated with the size of the audited company
(H1) and the amount of the audit fee (H2).
The research on the practice of KAM reporting allowed to identify the
most problematic areas existing in the companies of the mining branch,
which include: investments in related entities, property and tangible
assets, provisions and contingencies. The verification of the suggested
research hypotheses allowed to state that in the case of the companies
of the mining sector, the higher number of reported KAMs is not
connected with the number of these companies' assets, but the scale of
their activity, expressed with the number of incomes. The relationship
between the number of KAMs and an amount of an audit fee was also
confirmed. The added value of the conducted research of KAM
reporting practice is a possibility to use the results in the practice of the
activity of mining companies. The review of the most frequent KAMs
provides a general opinion on specific problems existing, according to
the authors, in companies operating businesses in this branch. The
authors notice limitations of the research resulting from the adopted
research sample and a need to conduct next studies, which will be
connected with the in-depth analysis of the scope and the type of
disclosed KAMs as well as their changes in the next reporting periods.