Transparency versus Independence: A Systematic Literature Review of the Consequences of Expanded Audit Reporting
DOI:
https://doi.org/10.70142/jbs.v3i1.135Keywords:
Expanded Audit Reporting, Key Audit Matters, Auditor Independence, Audit Transparency, Audit QualityAbstract
This study examines the consequences of expanded audit reporting through a qualitative systematic literature review, focusing on the tension between transparency and auditor independence. Drawing on prior research on Key Audit Matters (KAMs), Critical Audit Matters (CAMs), investor responses, financial reporting quality, loan contracting, auditor judgment, and non-audit services, the review synthesizes recurring themes and divergent findings across the literature. The results indicate that expanded audit reporting enhances transparency by making significant audit risks and professional judgments more visible, but its incremental informativeness to investors remains limited when disclosed risks are already publicly known. Nevertheless, expanded reporting can influence financial reporting quality, management disclosure, and lending decisions, particularly when disclosures are entity-specific and decision-relevant. The review further identifies auditor judgment and economic incentives as critical conditions affecting reporting credibility. Overall, transparency and independence are interconnected: expanded reporting is most effective when greater disclosure is accompanied by objective professional judgment and strong auditor-independence safeguards.
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