Auditors' experiences of the impact of ISA 701 on audit practice and audit accountability in South African state-owned enterprises

Purpose This study explores how public sector auditors experience and interprets the implementation of International Standard on Auditing (ISA) 701, which mandates the communication of key audit matters (KAMs), with particular attention to its perceived implications for audit practice and accountability in the audit of South African State-Owned Enterprises (SOE). Design/methodology/approach The sample comprises senior external auditors and technical managers with expertise in SOE auditing in South Africa. A qualitative phenomenological approach was employed, utilising semi-structured interviews. Findings The findings suggest that auditors experienced changes in several aspects of audit practice following the implementation of ISA 701. Participants described increased technical training focused on identifying and responding to client-specific risks, as well as more structured engagement between audit leaders and audit teams in discussions of significant risks. The implementation of ISA 701 was also associated with greater involvement of technical staff, a strengthened audit review process, and an increased emphasis on professional judgement. While these changes were most evident in documentation and review practices, participants reported more limited shifts in the underlying audit approach over time as KAMs became more routine. The practice of benchmarking risk and audit procedure documentation was identified as a barrier to a client-specific, risk-based audit approach, which some participants viewed as limiting its broader implications for public accountability. Originality/value This study contributes to the literature on the application of new international auditing standards by public sector auditors and offers insight into how such standards are operationalised and mobilised to influence auditors' behaviour.