The Influence of Audit Risk and Materiality Guidelines on Auditors’ Planning Materiality Assessment

Julia Baldauf, Marcel Steller, Rudolf Steckel


At present, methods to improve auditquality and auditing decisions are being debated by standard setters andresearchers worldwide. Materiality has been and continues to be a topic ofimportance for auditors.Audit quality is primarilyinfluenced by two factors: the requirements of standard setters and theprofessional judgment of auditors. Materiality judgment is primarily determinedby the subjective judgment of the auditor because there is a lack of clear, standardizedguidelines for such judgments. Thus, the same materiality issue could be judgeddifferently by different auditors. Auditors’ materiality judgments areimportant because they significantly influence what information is recorded inthe accounts, disclosed in financial statements and made available to externalparties for decision-making. The objective of this study is to examine theinfluence that audit risk and quantitative guidelines have on the assessment ofplanning materiality and on the adjustment of material misstatements. We use acase study and conduct an experiment. The study results provide evidence thatthe standardization and implementation of quantitative materiality guidelinesresult in a smaller range of planning materiality judgments. This paperdiscusses the implications of those findings.

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Accounting and Finance Research
ISSN 1927-5986 (Print)   ISSN 1927-5994 (Online) Email:

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