Analysis of Key Audit Matters (KAM) and Cash Flow Pattern on Financial Distress

Authors

  • Nurhastuty Kesumo Wardhani Department of Accounting, Trisakti University, Jakarta, Indonesia Author https://orcid.org/0000-0002-2020-6802
  • Lewis Liu Business School, The University of Queensland, Brisbane, Australia Author
  • Sylvia Khan Department of Accounting, Trisakti University, Jakarta, Indonesia Author

DOI:

https://doi.org/10.55578/jedip.2604.005

Keywords:

Cash Flow, Financial Distress, KAM, SA 701

Abstract

Economic downturns can reduce a firm’s ability to sustain operations and meet its financial obligations. In this context, key audit matter (KAM) disclosures and cash flow patterns may provide useful signals of financial distress. This study examines their impact on firms in the consumer cyclical and non-cyclical sectors in 2022. The results show that entity-level KAM disclosures are positively associated with financial distress, suggesting that broader audit risks reflect underlying firm conditions, while stronger cash flow patterns reduce their likelihood. This study contributes to the literature by jointly examining KAM disclosure levels and cash flow patterns, offering new evidence on their roles in assessing financial distress.

Author Biographies

  • Nurhastuty Kesumo Wardhani, Department of Accounting, Trisakti University, Jakarta, Indonesia

    Senior Lecturer in accounting, Faculty of Economics and Business, Trisakti University

  • Sylvia Khan, Department of Accounting, Trisakti University, Jakarta, Indonesia

    HDR, Business School, Trisakti University 

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Published

2026-04-22

Data Availability Statement

The data that support the findings of this study are available from the corresponding author upon reasonable request.

Issue

Vol. 2 No. 1 (2026)

Section

Articles

License

Copyright (c) 2026 Nurhastuty Kesumo Wardhani, Lewis Liu, Sylvia Khan (Author)

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

How to Cite

Analysis of Key Audit Matters (KAM) and Cash Flow Pattern on Financial Distress. (2026). Journal of Economic Development, Innovation and Policy, 2(1), 84-95. https://doi.org/10.55578/jedip.2604.005