Audit materiality and contexts that impact the auditor's test judgment
DOI:
https://doi.org/10.5380/rcc.v15i2.85828Keywords:
Audit Materiality. Audit. Analytical Procedure. Auditor's Judgment. Subjectivity.Abstract
The objective of this study was to examine auditors' perceptions of audit materiality and professional judgment. This study is justified insofar as the audit materiality is something subjective that is influenced by the auditor's judgment and particularly because there are different stances in relation to its disclosure, thus requiring additional empirical studies to fill the theoretical gap. This qualitative study, taking an interpretive paradigm, uses the Q Methodology and Oral Narrative for data gathering. Interviewees were audit partners, managers and audit seniors of Big 4 firms and partners of the 2nd-tier audit firms. The research instrument included the presentation of 27 contexts arranged on cards that can be freely sorted in a decreasing manner in terms of the participant's perception of relevance as situations that would make him/her change materiality in a client. Data corpus consists of 18 respondents. The interpretive treatment drew on templates analysis. Based on the studies, the ranking of the subjective perception of risk is the main indicator of materiality. Also, it is concluded that although the auditor is subject to the methodologies of each firm, the regulatory aspect influences in a harmonization of the way of proceeding the audit activity and it is not possible to ignore the aspect of the intimate and individual perception of the auditor. In addition, auditors and preparers stances on whether planning materiality should or should not be disclosed are not viewed as decision relevant. The study sets a pace in that it presents materiality as a probability of the auditor's perception of risk of exposure and in understanding the factors of materiality judgment ex ante delivery of the final audit report following an interpretive perspective.
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