Relationship between key audit matters reporting and audit fees: moderating role of audit firm quality and client complexity

Anojan Vickneswaran

doi:10.1108/REGE-08-2025-0116

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Relationship between key audit matters reporting and audit fees: moderating role of audit firm quality and client complexity

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Relationship between key audit matters reporting and audit fees: moderating role of audit firm quality and client complexity

Anojan Vickneswaran

REGE Revista de Gestao, Vol.33, pp.154-167

2026

DOI: https://doi.org/10.1108/REGE-08-2025-0116

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Abstract

audit fees

Key audit matters

Big4 auditors

Audit efforts

Auditor workload

Client complexity

Purpose: This study investigates the relationship between the number of key audit matters (NKAMs) and audit fees (AFEE), and the moderating roles of audit firm quality (proxied by the Big4 auditors) and client complexity (proxied by client size and revenue) in this relationship. Design/methodology/approach: The study uses 1,163 listed non-financial firm-year observations in Germany from 2018 to 2023. I employ ordinary least squares regression to test the hypotheses and use entropy balancing and propensity score matching to address endogeneity concerns. Findings: The regression results show a significant positive association between NKAMs and AFEE, which is stronger for Big4 clients and complex (large-size and high-revenue) clients. The results are robust across alternative models, variables and sample specifications. Practical implications: This study contributes to the audit quality literature regarding KAM reporting, audit fees, audit firm quality and client complexity. These findings have implications for various financial statement users. Originality/value: To the best of the author’s knowledge, this study is the first empirical investigation to examine the relationship between NKAMs and AFEE in Germany. Moreover, no prior study has examined the moderating role of Big4 auditors and client complexity in this relationship.

Details

Title: Relationship between key audit matters reporting and audit fees: moderating role of audit firm quality and client complexity
Authors: Anojan Vickneswaran (Corresponding Author) - University of the Sunshine Coast, Queensland, School of Business and Creative Industries
Publication details: REGE Revista de Gestao, Vol.33, pp.154-167
Publisher: Universidade de Sao Paulo, Faculdade de Economia, Administracao e Contabilidade, Departamento de Administracao
Date published: 2026
DOI: 10.1108/REGE-08-2025-0116
ISSN: 2177-8736
Copyright note: © Anojan Vickneswaran. Published in Revista de Gest~ao. Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and noncommercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/
Organisation Unit: School of Business and Creative Industries
Language: English
Record Identifier: 991261196102621
Output Type: Journal article

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