Text similarity, boilerplates and their determinants in key audit matters disclosure

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Tobias Carlé, Nicolas Pappert ORCID logo, Reiner Quick ORCID logo


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Like the European Commission, many regulators and standard setters worldwide have substantially revised the requirements for auditor’s reports on statutory audits of public interest entities. Their objective was to improve the report’s information content and, hence, the transparency of the audit. A significant change was the introduction of a key audit matters (KAM) disclosure which increased the scope, meaningfulness, and individuality of auditor’s reports. However, critics fear that auditors could use similar or standard formulations (i.e., boilerplate reporting) and not really increase the information value of the auditor’s report. Therefore, this study investigates text similarities in KAM disclosure practice in the auditor’s reports of German HDAX companies between 2017 and 2019. The results suggest that auditors often use similar formulations when disclosing a KAM on the same issue at the client level in consecutive years. We further find that the similarity rate is significantly negatively correlated to an audit firm change, and positively correlated to client firms that have a stable financial position measured by a high portion of equity.

Keywords: Key Audit Matters, Auditor’s Report, Text Similarity, Boilerplate Reporting, Information Value, Audit Quality

Authors’ individual contribution: Conceptualization — T.C., N.P., and R.Q.; Methodology — T.C., N.P., and R.Q.; Formal Analysis — T.C. and N.P.; Investigation — T.C., N.P., and R.Q.; Writing — Original Draft — T.C. and N.P.; Writing — Review & Editing — R.Q.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

Acknowledgements: We would like to thank two anonymous reviewers for their helpful comments and suggestions. Furthermore, we would like to thank participants of the 9th EIASM Workshop on Audit Quality (Milan, Università Cattolica del Sacro Cuore, Italy, Sept 30 – Oct 1, 2022) for their comments on a previous version of this paper.

JEL Classification: M40, M42, M48

Received: 01.11.2022
Accepted: 13.01.2023
Published online: 16.01.2023

How to cite this paper: Carlé, T., Pappert, N., & Quick, R. (2023). Text similarity, boilerplates and their determinants in key audit matters disclosure. Corporate Ownership & Control, 20(2), 49–62. https://doi.org/10.22495/cocv20i2art4