Auditors’ Assessments of Materiality Between Professional Judgment and Subjectivity
Materiality has been and continues to be a topic of importance for auditors. It is considered as a significant factor in the planning of the audit procedures, performing the planned audit procedures, evaluating the results of the audit procedures and issuing an audit report. Recently, there has been a renewed interest in the concept of materiality motivated by concerns at the Sarbanes- Oxley Act, Securities and Exchange Commission and International Auditing and Assurance Standards Board issuance of proposed standards on materiality. The objective of this paper is to discuss and analyze comprehensively the concept of audit materiality including how materiality threshold is determined by auditors. Auditing standards settings bodies pointed out that auditor’s determination of materiality threshold is a matter of professional judjment. As a judgmental concept, however, materiality is susceptible to subjectivity. Furthermore, the absence of audting standards on how materiality is determined has highlighted the significance of this issue and indicated that guidance for materiality professional judgments must come from other non-authoritative sources such as empirical researches. A number of new and important areas of materiality are in need of further investigation.
Volume (Year): (2011)
Issue (Month): 4(4) (August)
|Contact details of provider:|| Web page: http://journals.univ-danubius.ro/index.php/oeconomica/|
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ojo, Marianne, 2006. "Eliminating the Audit Expectations Gap : Myth or Reality?," MPRA Paper 232, University Library of Munich, Germany, revised Sep 2006.
- Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
When requesting a correction, please mention this item's handle: RePEc:dug:actaec:y:2011:i:4:p:72-88. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Daniela Robu)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.