This study aims to explore the application of a new audit regulation, International Standard on Auditing no. 701 (ISA 701) on Key Audit Matters (KAMs), in the developing country context of Jordan. To do so, the researchers analyzed the content of audit reports issued in Jordan in 2017 and 2018, and conducted interviews with 18 Jordanian audit partners and directors involved in KAM reporting. Findings of this study show that the number of KAMs reported in Jordan is relatively small, and that they emphasize items such as accounts receivable, inventory, investment property, and revenue. They also show that audit firms generally disagree on the nature and content of KAMs, overwhelmingly tend to report industry‐specific KAMs rather than entity‐specific KAMs, and avoid reporting KAMs related to governance or internal controls. Justifications by interviewees include ambiguity of ISA 701 and discretion in its application, fear of displeasing closely held clients who do not demand high‐quality audits, and limited interest by regulatory authorities in the detailed content of KAMs.
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