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The identification of risks of material misstatement based
on key audit matters in line with International Standard on Auditing 701

The purpose of this paper is to determine what key audit matters (KAM) have been identified by statutory
auditors from various audit firms in companies from various industries, which assertions appeared most
often in the audit reports, and what the links were between the auditing company, KAM, the assertion and
the market sector. The research sample consisted of 317 companies listed on the Warsaw (158 companies)
and London (159 companies) stock exchanges. The analysis was divided into companies from the
following ten market sectors: construction, chemicals, energy, mining, IT, media, automotive, real estate,
oil & gas and food. The research was executed based on the analysis of annual financial statements (annual
reports) and independent auditor reports that were published by in-scope entities for the latest
twelve-month period available as at the date of the research (the twelve-month periods ended on December 31, 2017, and March 31, 2018). The auditors of the tested companies identified a total of 793 unique KAMs. Based on their detailed descriptions, they were then divided into 36 categories (including the cate-gory ‘none’), and they were finally mapped with a total of 2,094 assertions from 7 types. All analyses and developed charts were supported by the Microsoft Power BI data analysis tool.

