Factors Influencing Key Audit Matter Reporting in the Stock Exchange of Thailand: Empirical Evidence from 2016–2020 Data

Comments 1: [The paper explores an compelling topic focusing on the new auditing standard on information reporting of Key Audit Matters. It is comprehensively analyzed from the perspective of scientific documentation, applied methodology and interpretation of results.

Introduction:

To improve the overall flow of the paper, consider refining the introduction section to bolster its logical cohesion and enhance its clarity, thereby facilitating a smoother reading experience.]

Response 1: [The author has significantly revised the abstract and the introduction section to ensure the overall flow of the paper. Specific context and contribution of this article is highlighted. The revisions include:

Page 1, Line 15

Abstract: This research aims to in response to the new auditing standard on information reporting of Key Audit Matters (KAM) as a separate section in the auditor’s report, which will increase the transparency and quality of the audit report. It is not only explored current practice of KAM reporting among Thai listed companies, but also seeking for factors influence on the KAM reporting in Thailand. The study explores the quantitative methodology through secondary data collected from the Thai Stock Exchange of Thailand. This archival research explores 343 listed companies in the Thai Stock Exchange of Thailand during 2016 to 2020. Descriptive statistics, correlation matrix and regression analysis are employed. The results suggest that type of auditor (Big 4 or non-Big 4 audit firms), audit fee, audit independence, and industry have a direct positive impact on key audit matter reporting at 0.05 significant level. However, the evidence also suggests that female on board, year, ROA (return on asset), risk, size was not validated factor that has a direct positive impact on key audit matter reporting at 0.05 significant level.

Page 1, Line 39-48

A new crucial aspect of this external audit process is the disclosure of Key Audit Matters (KAMs), which serves as a tool for auditors to communicate significant issues to ex-ternal stakeholders who have increasingly complex expectations. The International Auditing and Assurance Standards Board (IAASB) is making changes to the structure, wording and content of the auditor's report, including the inclusion of key audit matters for audits of listed entities. It is hoped that the inclusion of key audit matters will pro-vide useful information to users of financial statements to enhance their understanding of the matters that, in the auditor's professional judgment, are of most importance in the audit and will enhance users' understanding of the quality of the audit, particularly if there is an opportunity to further discuss these matters with the audit committee or the auditor, and may be relevant to a better assessment of the quality of the audit (IAASB, 2020).

Page 2, Line 59-62

Audit reports of companies listed on the Bucharest Stock Exchange issued after the adoption of the new reporting requirements for auditing have a higher communication value and, consequently, a higher quality of financial audit engagements (Grosu et al., 2020).

Page 7, Line 121-131

From Table 1, it can be seen that there is a lot of research on KAM in Thailand, focusing on communication and reporting formats (Kitiwong & Srijunpetch, 2019; Ka-john Nuntathanakan et al., 2020; Matheesuwapab, 2018; Mechumnan et al., 2019; In-tagool et al., 2020; Nuntathanakan et al., 2020; Samakketkarnpol, 2019; Parte et al., 2022; Sawangjan & Suttipun, 2020;), disclosure quality (Kanno & Penwuttikul, 2018a; Limaporn et al., 2019; Yarana et al., 2018), impact on stakeholders (Boonyanet & Prom-sen, 2018; Chinpuvadol & Boonyanet, 2020; Kamwass et al., 2020), and auditor respon-sibility (Pratoomsuwan & Yolrabil, 2020a, 2020b; Kitiwong & Sarapaivanich, 2020). However, there is still a lack of studies on the relationship between firm characteristics and the format and content of KAM, as well as in-depth analysis of the factors that in-fluence KAM reporting, which is a gap in research on this issue in Thailand.

Page 7, Line 216-218

Boards (audit committees) with female directors (members) are more likely to demand higher audit quality, other conditions held constant (Lai, 2017).

Page 10, Line 256-218

Boards (audit committees) with female directors (members) are more likely to demand higher audit quality, other conditions held constant (Lai, 2017).]

“[updated text in the manuscript]”

Comments 2: [The summary of existing research appears insufficient due to a lack of comprehensive references.]

Response 2: Agree. Several references have been added in the text.

Grosu, M., Robu, I.-B., and Istrate, C. (2020). The Quality of Financial Audit Missions by Reporting the Key Audit Matters. Audit Financiar 18, 182–195. doi: 10.20869/AUDITF/2020/157/005.

IAASB (2020). Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements. Available at: https://www.iaasb.org/publications/2020-handbook-international-quality-control-auditing-review-other-assurance-and-related-services

Lai, K., Srinidhi, B., Gul, F., and Tsui, J. (2017). Board Gender Diversity, Auditor Fees and Auditor Choice. Contemporary Accounting Research 34. doi: 10.1111/1911-3846.12313.

Comments 3: [Methodology and Sample:

The authors should extensively explain the reasons for focusing on the Thailand market. However, it is important to explore potential data constraints that may have influenced the outcomes.]

Response 3: Agree. From Table 1, it can be seen that there is a lot of research on KAM in Thailand, focusing on communication and reporting formats (Kitiwong & Srijunpetch, 2019; Matheesuwapab, 2018; Mechumnan et al., 2019; In-tagool et al., 2020; Nuntathanakan et al., 2020; Samakketkarnpol, 2019; Parte et al., 2022; Sawangjan & Suttipun, 2020;), disclosure quality (Kanno & Penwuttikul, 2018a; Limaporn et al., 2019; Yarana et al., 2018), impact on stakeholders (Boonyanet & Prom-sen, 2018; Chinpuvadol & Boonyanet, 2020; Kamwass et al., 2020), and auditor responsibility (Pratoomsuwan & Yolrabil, 2020a, 2020b; Kitiwong & Sarapaivanich, 2020). However, there is still a lack of studies on the relationship between firm characteristics and the format and content of KAM, as well as in-depth analysis of the factors that in-fluence KAM reporting, which is a gap in research on this issue in Thailand.

Comments 4: [To further enhance the study's robustness, it would be beneficial to discuss the limitations of confining the sample to 2020, assessing the analysis's current validity. Robustness Test:]

Response 4: Agree. To confirm the accuracy of chosen proxy for each variable, this study adopted most common used as followed; This study employ number of KAMs issue reported which is the most cited proxy represent KAM (Sirois, Bédard, & Boivin, 2016; Knechel, & Salterio, 2016; Sullivan, & Pincus, 2018; Zhou, & Elder, 2018; Habib, D' Costa, Huang, Bhuiyan, & Sun, 2020). 

Comments 5: [Provide more detailed justification for the alternative measures of KAMs in robustness tests, discussing any limitations these measures might have.]

Response 5: Agree. The robustness test has been excluded from the data analysis due to following reasons.

This study employs number of dummy variables which Big-4 given 1 otherwise 0 which is the most cited proxy represent Type of Auditor (Chung, & Lindsay, 2018). This study employs number of natural logarithms of audit fee which is the most cited proxy represent Audit fee (Knechel, & Willekens, 2006). This study employs number of percentages of female board to total number of boards which is the most cited proxy represent Female on boa (Darmadi, 2013).

Comments 6: [Discussion and Conclusion:

The discussion is limited, especially regarding conclusive summaries. Expand the discussion section to more thoroughly explore the implications of the findings for theory, practice, and policy.]

Response 6: Agree. Page 13, Line 349

Key Audit Matters (KAM) refer to issues that auditors deem significant and select from the broader set of items communicated to those charged with governance. KAM high-lights matters that, from the auditor’s perspective, hold particular importance, enabling management to identify and prioritize these issues accordingly. When such matters are linked to organizational risks, management is prompted to develop strategic responses to mitigate potential impacts on the financial statements. Consequently, KAM serves as valuable information, offering strategic benefits to the organization, which can, in turn, enhance investor confidence and attract further investment into the company. KAM also reflects the regulators' objective of enhancing the value of auditors’ communication in their reports by providing more transparent audit information to users of financial statements, thereby improving the overall quality of audit reporting. Similarly, KAM strengthens the existing literature and provides evidentiary support for the applicability of accounting theories. As a relatively new standard, introduced in 2016 with the requirement for a distinct section on Key Audit Matters (KAMs) in audit re-ports, KAM presents valuable insights for researchers seeking to conduct more in-depth investigations.

Conclusion

Page 15, Line 409-417

This research is not only empirically confirmed agency theory but also provides practical contribution to manager of listed companies, those researchers who are en-tering this arena, and the regulators who monitor the quality of auditing. Since stake-holders' expectations have grown, recent improvements in organizational reporting have focused on enhancing the role of financial auditors and the quality of audit reports, particularly through ISA 701, "Communicating Key Audit Matters in the Independent Auditor's Report." Starting with financial statements for periods ending in 2016, standard setters required a distinct section on Key Audit Matters (KAMs) in audit re-ports to improve report content and transparency in financial reporting (IAASB, 2020). 

Page 15, Line 420-431

The findings reaffirm prior research, underscoring the continued significance of Big4 firms in the auditing sector. This is particularly evident in their enhanced capacity to report Key Audit Matters (KAMs) compared to non-Big-4 firms. Thus, at the inception of ISA 701 enforcement, Big4 audit reports may serve as a valuable reference for identifying significant matters and articulating KAMs with greater clarity. Nevertheless, it is essential for management to recognize that the inclusion of KAMs, which offer more insightful information, often correlates with higher audit fees. This increase reflects the additional effort and time required for auditors to assess and communicate critical is-sues to financial statement users. Additionally, the results indicate that the independence of the audit committee significantly influences KAM reporting. This finding suggests that all stakeholders—including management, shareholders, and professional accounting bodies—should work to strengthen audit independence of audit committee.

Page 16, Line 433-434

Moreover, the context of legal responsibility for audit results in Thailand lies with the auditor, not the audit firm, which may cause differences from other countries.

Page 16, Line 433-434

Future research could consider other audit characteristics to understand their effect on KAM reporting and compare the findings with other developing countries. Due to the relatively recent implementation of this standard, future research offers valuable opportunities for new insights.

Comments 7: [In my opinion, the study could be further improved to align with the quality of the journal.]

Response 7: Agree. The authors acknowledge the kind suggestions and have considerably revised the manuscript.

4. Response to Comments on the Quality of English Language

Point 1: Some sentences are wrong. Synonyms could be used to avoid repetition of phrases.

Response 1: English proofread has been done for the manuscript.

5. Additional clarifications

[All the comments have been included in the manuscript.]

Comments 1: [The study provides valuable insights into the factors influencing Key Audit Matters (KAM) reporting in Thai-listed companies between 2016 and 2020. The use of quantitative methods to analyze secondary data from 343 companies offers strong empirical evidence. However, the paper can benefit from clarifications in methodology, deeper analysis of certain results, and addressing minor formatting issues.

The focus on KAM reporting in Thailand is timely, especially with global shifts toward enhancing audit transparency. The paper contributes to the limited research on this topic in developing countries. The dataset spanning 343 companies over five years is commendable, offering a solid foundation for analysis. The objectives are well-articulated, focusing on exploring the number of KAM issues and analyzing variables affecting KAM reporting. The application of regression and correlation analyses is appropriate, and the results are presented clearly.

Specific Comments:

1.           The introduction effectively outlines the background and relevance of KAM reporting in Thailand. However, it would benefit from a brief explanation of how this research extends or differs from prior studies conducted in other ASEAN countries.]

In the ASEAN, Malaysia, Singapore, Philippines and Thailand respectively are front runner to adopt the KAM reporting auditing standard. However, other ASEAN countries should refer to these four nations in order to achieve the adoption of KAM reporting. The ASEAN country could replicate the process of KAM reporting adoption from Thai experience for adoption of KAM reporting.

Comments 2: [2.             The literature review is comprehensive, but it can be improved by linking the studies discussed more explicitly to the hypotheses tested in this paper. For example, studies like Velte (2018) are mentioned, but their connection to your findings could be strengthened.]

Response 2: Agree. However, this study contradicts with Velte (2018) and Bepari (2023) who’s found a positive relationship between the proportion of females on the board of audit commit-tees and KAM readability. While many studies abroad have found that the number of females on the audit committee affects the number of KAM, but in Thailand, the rela-tionship was not found. This may be due to different regulations and environment. However, The OECD Corporate Governance Factbook (2021) places importance on board diversity and believes that more women directors may bring independent views to board meetings and have a stronger focus on the monitoring function (“OECD Cor-porate Governance Factbook 2021”, 2021). As a result, countries try to push for more gender diversity both in the form of changing the law, adjusting the criteria, making suggestions, etc.

Comments 3: [3.             Regarding the methodology:

a)           Sample Size and Selection: While the study mentions using 343 firms, further details on how these companies were selected would be helpful. Were there any inclusion/exclusion criteria (e.g., sector, firm size)?]

Response 3: Agree. In archival accounting research, the entire population is typically used as the sample, eliminating the need for a defined sample size. However, it is important to note that incomplete data must be excluded (Cong & Du, 2022) to ensure data completeness, as such data can introduce bias and compromise the validity of the results.

To test for the factors, influence KAMs reporting, whole listed companies of the SET were used as the population in this study. The study did not include companies that (1) were registered in financial industry and property funds section or the REITs section of the property and construction industry sector, (2) issued no annual reports between 2016 and 2020, (3) did not end their accounting year on 31st December, (4) were registered in the Market for Alternative Investment (MAI) or (5) were withdrawn from listing by the SET including companies under rehabilitation. Furthermore, in order to remain unbias this study removed missing data from the five years data set or data incompletion of any year observation resulting to 343 listed companies of the SET.

Comments 4: [b)            Variable Definitions: The equation presented in the methodology section should include more detailed definitions for the control variables, especially "Risk" and "Size," to ensure readers can replicate the study.]

Response 4: Agree. The variables have been defined:

Year is the fiscal year that data is collected.

ROA is return on assets.

Risks is the ratio of debt to equity.

Size is the natural logarithm of total asset.

Industry is the nominal variable, divided into 7 types of industries.

Comments 5: [c)             Missing Assumptions: While correlation and regression analyses are employed, the paper lacks a discussion on how assumptions like multicollinearity, normality, and heteroscedasticity were handled.]

Response 5: Agree. Descriptive statistics explain Mean, Standard Deviation, Minimum, Maximum. Lower than 0.5 from pearson’s correlation avoid high-degree of correlation, thus multicollinearity must be in concerned.

To test for the factors, influence KAMs reporting, whole listed companies of the SET were used as the population in this study. The study did not include companies that (1) were registered in financial industry and property funds section or the REITs section of the property and construction industry sector, (2) issued no annual reports between 2016 and 2020, (3) did not end their accounting year on 31st December, (4) were registered in the Market for Alternative Investment (MAI) or (5) were withdrawn from listing by the SET including companies under rehabilitation. Furthermore, in order to remain unbias this study removed missing data from the five years data set or data incompletion of any year observation resulting to 343 listed companies of the SET.

Comments 6: [4.             The results are presented well, with tables offering a clear depiction of statistical findings. However, the discussion of the role of "Female on board" is somewhat vague. While it is stated that no significant relationship was found, more discussion on why this might be the case compared to findings in other countries would be valuable. The regression model's R-squared values suggest that while some factors influence KAM reporting, a significant portion of the variance remains unexplained. This should be acknowledged, and potential additional variables could be suggested for future research.]

Response 6: Agree. Gender identity in modern world is considered complicated, as gender at birth identify physical gender identity while classic literature on gender seem to point out the preferred gender. Furthermore, context of study during last century might not directly appropriate with current context

Comments 7: [5.             The discussion is thorough and ties back well to the hypotheses. Nevertheless, there is room for a deeper exploration of the implications for Thai regulatory bodies. The findings on audit independence, in particular, could be linked more closely to potential policy reforms in Thailand. The limitations section could benefit from a broader reflection on the data timeframe (2016-2020). Given the rapid changes in financial markets, could the findings differ significantly if extended to more recent years?]

Response 7: Agree. Page 13, Line 349

Key Audit Matters (KAM) refer to issues that auditors deem significant and select from the broader set of items communicated to those charged with governance. KAM high-lights matters that, from the auditor’s perspective, hold particular importance, enabling management to identify and prioritize these issues accordingly. When such matters are linked to organizational risks, management is prompted to develop strategic responses to mitigate potential impacts on the financial statements. Consequently, KAM serves as valuable information, offering strategic benefits to the organization, which can, in turn, enhance investor confidence and attract further investment into the company. KAM also reflects the regulators' objective of enhancing the value of auditors’ communication in their reports by providing more transparent audit information to users of financial statements, thereby improving the overall quality of audit reporting. Similarly, KAM strengthens the existing literature and provides evidentiary support for the applicability of accounting theories. As a relatively new standard, introduced in 2016 with the requirement for a distinct section on Key Audit Matters (KAMs) in audit re-ports, KAM presents valuable insights for researchers seeking to conduct more in-depth investigations.

Conclusion

Page 15, Line 409-417

This research is not only empirically confirmed agency theory but also provides practical contribution to manager of listed companies, those researchers who are en-tering this arena, and the regulators who monitor the quality of auditing. Since stake-holders' expectations have grown, recent improvements in organizational reporting have focused on enhancing the role of financial auditors and the quality of audit reports, particularly through ISA 701, "Communicating Key Audit Matters in the Independent Auditor's Report." Starting with financial statements for periods ending in 2016, standard setters required a distinct section on Key Audit Matters (KAMs) in audit re-ports to improve report content and transparency in financial reporting (IAASB, 2020). 

Comments 8: [6.             The conclusion accurately summarizes the key findings but could offer more actionable recommendations for practitioners, particularly auditors and regulators. Also, consider adding a brief statement on the study’s broader impact on ASEAN or developing countries.]

Response 8: Agree. Page 15, Line 420-431

The findings reaffirm prior research, underscoring the continued significance of Big4 firms in the auditing sector. This is particularly evident in their enhanced capacity to report Key Audit Matters (KAMs) compared to non-Big-4 firms. Thus, at the inception of ISA 701 enforcement, Big4 audit reports may serve as a valuable reference for identifying significant matters and articulating KAMs with greater clarity. Nevertheless, it is essential for management to recognize that the inclusion of KAMs, which offer more insightful information, often correlates with higher audit fees. This increase reflects the additional effort and time required for auditors to assess and communicate critical is-sues to financial statement users. Additionally, the results indicate that the independence of the audit committee significantly influences KAM reporting. This finding suggests that all stakeholders—including management, shareholders, and professional accounting bodies—should work to strengthen audit independence of audit committee.

Page 16, Line 433-434

Moreover, the context of legal responsibility for audit results in Thailand lies with the auditor, not the audit firm, which may cause differences from other countries.

Page 16, Line 433-434

Future research could consider other audit characteristics to understand their effect on KAM reporting and compare the findings with other developing countries. Due to the relatively recent implementation of this standard, future research offers valuable opportunities for new insights.

Comments 9: [7.             There are a few minor grammatical errors throughout the text. For instance, in the abstract, “response to the new auditing standard” should be revised to “in response to the new auditing standard.” Avoid passive constructions where possible for a more direct tone (e.g., “The study explores” rather than “This study is explored”).]

Response 9: Agree. The tone has been revised in the abstract and the main text as well.

Comments 10: [8.          Some section headings (e.g., "Introduction") are inconsistently formatted. Ensure all headings follow the journal’s guidelines. Double-check table formatting and ensure alignment with the journal’s requirements, particularly in Tables 2 and 3.]

Response 10: Agree. The formatting has been checked.

Comments 11: [9.          Some references in the text appear incomplete (e.g., "Rahaman et al., 2023"). Ensure that all citations are fully referenced in the bibliography.]

Response 11: Agree. The references have been updated along with the addition of the new references.

Comments 12: [Overall Recommendation: The paper is well-conceived and contributes meaningfully to the literature on audit practices in Thailand. With minor revisions, particularly in methodological clarification, deeper analysis of certain findings, and attention to formatting, the paper will be suitable for publication.]

Response 12: Agree. The references have been updated along with the addition of the new references.

4. Response to Comments on the Quality of English Language

Point 1: ….

Response 1: English proofread has been done for the manuscript.

5. Additional clarifications

[All the comments have been included in the manuscript.]

Comments 1: [Dear authors

It's my pleasure to contribute to the evaluation of this work.

Please kindly find atached the comments which aim to improve the quality of paper.

This paper aims to discuss the concept of KAM (key audit matters), a concept that refers to those matters that, based on the auditor's professional judgment, are of the greatest importance to the audit of financial statements for a given period, the study thus investigating the current practice of KAM reporting among listed companies in Thailand by identifying the factors that influence KAM reporting in Thailand, based on data collected from the Thai Stock Exchange of Thailand. However, certain improvements are required as follows:

1.       The abstract section needs to be more explicit to emphasize that in order to improve transparency in financial auditing and thus increase the quality of audit reports, a separate section of the audit report is reserved for key audit matters (KAM). It is also important to point out that, the quality of audit reporting is measured by the assurance of transparency, which in turn can also be influenced by a number of characteristics such as: type of auditor, lag audit fee, audit independence, and industry.]

Response 1: Abstract has been revised as “This research aims to in response to the new auditing standard on information reporting of Key Audit Matters (KAM) as a separate section in the auditor’s report, which will increase the transparency and quality of the audit report. It is not only explored current practice of KAM re-porting among Thai listed companies, but also seeking for factors influence on the KAM reporting in Thailand. The study explores the quantitative methodology through secondary data collected from the Thai Stock Exchange of Thailand. This archival research explores 343 listed companies in the Thai Stock Exchange of Thailand during 2016 to 2020. Descriptive statistics, correlation matrix and regression analysis are employed. The results suggest that type of auditor (Big 4 or non-Big 4 audit firms), audit fee, audit independence, and industry have a direct positive impact on key audit matter reporting at 0.05 significant level. However, the evidence also suggests that female on board, year, ROA (return on asset), risk, size was not validated factor that has a direct positive impact on key audit matter reporting at 0.05 significant level.”

Comments 2: [2.             From the introduction section, we cannot understand the motivation and contribution of the study context. Why this study analyzes the exploration of current KAM reporting practice among Thai listed companies, and resorts to search for the factors influencing KAM reporting in Thailand. Clearer discussion on the relationship between auditor type, delayed audit fee, audit independence and industry, and reporting of key audit issues are highly needed to present the motivation of this study. It needs to be argued that, one of the sides of reporting quality in financial audit is the transparency of information presented in audit reports by financial auditors, this feature is enhanced by the presentation of key audit matters (KAMs) in audit reports.]

Response 2: Agree. A new crucial aspect of this external audit process is the disclosure of Key Audit Matters (KAMs), which serves as a tool for auditors to communicate significant issues to ex-ternal stakeholders who have increasingly complex expectations. The International Auditing and Assurance Standards Board (IAASB) is making changes to the structure, wording and content of the auditor's report, including the inclusion of key audit matters for audits of listed entities. It is hoped that the inclusion of key audit matters will pro-vide useful information to users of financial statements to enhance their understanding of the matters that, in the auditor's professional judgment, are of most importance in the audit and will enhance users' understanding of the quality of the audit, particularly if there is an opportunity to further discuss these matters with the audit committee or the auditor, and may be relevant to a better assessment of the quality of the audit (IAASB, 2020).

From Table 1, it can be seen that there is a lot of research on KAM in Thailand, focusing on communication and reporting formats (Kitiwong & Srijunpetch, 2019; Matheesuwapab, 2018; Mechumnan et al., 2019; Intagool et al., 2020; Nuntathanakan et al., 2020; Samakketkarnpol, 2019; Parte et al., 2022; Sawangjan & Suttipun, 2020;), dis-closure quality (Kanno & Penwuttikul, 2018a; Limaporn et al., 2019; Yarana et al., 2018), impact on stakeholders (Boonyanet & Promsen, 2018; Chinpuvadol & Boonyanet, 2020; Kamwass et al., 2020), and auditor responsibility (Pratoomsuwan & Yolrabil, 2020a, 2020b; Kitiwong & Sarapaivanich, 2020). However, there is still a lack of studies on the relationship between firm characteristics and the format and content of KAM, as well as in-depth analysis of the factors that influence KAM reporting, which is a gap in research on this issue in Thailand.

Comments 3: [3.             The sample represented companies listed on the regulated market of the Thai Stock Exchange of Thailand during the period 2016-2020, could be extended up to the year 2022 or the choice of the period should be explicitly argued.]

Response 3: Agree. To confirm the accuracy of chosen proxy for each variable, this study adopted most common used as followed; This study employ number of KAMs issue reported which is the most cited proxy represent KAM (Sirois, Bédard, & Boivin, 2016; Knechel, & Salterio, 2016; Sullivan, & Pincus, 2018; Zhou, & Elder, 2018; Habib, D' Costa, Huang, Bhuiyan, & Sun, 2020). The robustness test has been excluded from the data analysis due to fol-lowing reasons. This study employs number of dummy variables which Big-4 given 1 otherwise 0 which is the most cited proxy represent Type of Auditor (Chung, & Lindsay, 2018). This study employs number of natural logarithms of audit fee which is the most cited proxy represent Audit fee (Knechel, & Willekens, 2006). This study employs number of percentages of female board to total number of boards which is the most cited proxy represent Female on boa (Darmadi, 2013).

Comments 4: [4.             The introduction and literature review sections should include gaps in previous literature. The authors should also add the contributions of this study at the end of the introduction section. Also, at least one sentence about the method used should be included in the introduction section.]

Response 4: Agree. Audit reports of companies listed on the Bucharest Stock Exchange issued after the adoption of the new reporting requirements for auditing have a higher communication value and, consequently, a higher quality of financial audit engagements (Grosu et al., 2020).

Comments 5: [5.             The overview presentation on empirical research on KAM and other related information in Thailand is very well emphasized by the authors, but I think it would be of impact to also highlight through another table and other results of studies conducted on samples of other stock exchanges. The papers of the authors are also relevant in this sense]

Response 5: Agree. Grosu, M., Robu, I.-B., and Istrate, C. (2020). The Quality of Financial Audit Missions by Reporting the Key Audit Matters. Audit Financiar 18, 182–195. doi: 10.20869/AUDITF/2020/157/005.

IAASB (2020). Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements. Available at: https://www.iaasb.org/publications/2020-handbook-international-quality-control-auditing-review-other-assurance-and-related-services

Lai, K., Srinidhi, B., Gul, F., and Tsui, J. (2017). Board Gender Diversity, Auditor Fees and Auditor Choice. Contemporary Accounting Research 34. doi: 10.1111/1911-3846.12313.

Comments 6: [6.             Make it clear that the discussion of the research methodology is very much needed and in the conclusion section, please add more implications related to the findings, limitations of the study and then some recommendations for future research. In the discussion or conclusion section, for each hypothesis established, it is important to specify the results obtained.]

Response 6: Agree. The findings reaffirm prior research, underscoring the continued significance of Big Four firms in the auditing sector. This is particularly evident in their enhanced capacity to report Key Audit Matters (KAMs) compared to Non-Big Four firms. Thus, at the inception of ISA 701 enforcement, Big Four audit reports may serve as a valuable reference for identifying significant matters and articulating KAMs with greater clarity. Nevertheless, it is essential for management to recognize that the inclusion of KAMs, which offer more insightful information, often correlates with higher audit fees. This increase reflects the additional effort and time required for auditors to assess and communicate critical issues to financial statement users. Additionally, the results indicate that the independence of the audit committee significantly influences KAM reporting. This finding suggests that all stakeholders—including management, shareholders, and professional accounting bodies—should work to strengthen audit independence of audit committee.

Moreover, the context of legal responsibility for audit results in Thailand lies with the auditor, not the audit firm, which may cause differences from other countries.

Future research could consider other audit characteristics to understand their effect on KAM reporting and compare the findings with other developing countries.

Comments 7: [7.             In the conclusions part should be argued, that in order to meet the increasingly sophisticated expectations of stakeholders, in recent years, the reporting of organizations have undergone a number of improvements, by reconsidering the role of the financial auditor and the quality of audit reporting, through ISA 701 "Communicating Key Audit Matters in the Independent Auditor's Report". Thus, according to the standard setters, it was required that starting with the audit of financial statements for periods ending at the end of 2016, a separate section referring to Key Audit Matters (KAMs) should be included in the audit report, a requirement that was of course aimed at improving the content of the audit report and increasing transparency in financial reporting (IAASB, 2020).]

Response 7: Agree. This research is not only empirically confirmed agency theory but also provides practical contribution to manager of listed companies, those researchers who are entering this arena, and the regulators who monitor the quality of auditing. Since stakeholders' expectations have grown, recent improvements in organizational reporting have focused on enhancing the role of financial auditors and the quality of audit reports, particularly through ISA 701, "Communicating Key Audit Matters in the Independent Auditor's Report." Starting with financial statements for periods ending in 2016, standard setters required a distinct section on Key Audit Matters (KAMs) in audit reports to improve report content and transparency in financial reporting (IAASB, 2020). 

Comments 8: [8.             This research is relatively new, in that since 2016 a separate section referring to Key Audit Matters (KAMs) has to be included in the audit report, and is therefore good and very useful for aspiring researchers.]

Response 8: Agree. Due to the relatively recent implementation of this standard, future research offers valuable opportunities for new insights.

Comments 9: [I recommend that figure no. 2 be redrawn to emphasize suggestively what was intended by its representation. Also both Figure 2 and Figure 3 should be explained in more detail.]

Response 9: Agree. Key Audit Matters (KAM) refer to issues that auditors deem significant and select from the broader set of items communicated to those charged with governance. KAM highlights matters that, from the auditor’s perspective, hold particular importance, enabling management to identify and prioritize these issues accordingly. When such matters are linked to organizational risks, management is prompted to develop strategic responses to mitigate potential impacts on the financial statements. Consequently, KAM serves as valuable information, offering strategic benefits to the organization, which can, in turn, enhance investor confidence and attract further investment into the company. KAM also reflects the regulators' objective of enhancing the value of auditors’ communication in their reports by providing more transparent audit information to users of financial statements, thereby improving the overall quality of audit reporting. Similarly, KAM strengthens the existing literature and provides evidentiary support for the applicability of accounting theories. As a relatively new standard, introduced in 2016 with the requirement for a distinct section on Key Audit Matters (KAMs) in audit reports, KAM presents valuable insights for researchers seeking to conduct more in-depth investigations.

Comments 10: [10.        Finally, I would like ask if you can improve the literature regarding the impact of audit report.]

Response 10: Agree. The literature has been revised.

4. Response to Comments on the Quality of English Language

Point 1: ….

Response 1: English proofread has been done for the manuscript.

5. Additional clarifications

[All the comments have been included in the manuscript.]