Materiality judgments on audit opinions / Takiah Mohd. Iskandar

Materiality is an important criterion needed for issuing an audit opinion. However, the guidance as how materiality should be judged is not clear. Research results show that "percentage effect of an item on net profit" is the most important variable in making materiality judgment. However...

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Main Author:	Mohd. Iskandar, Takiah
Format:	Article
Language:	English
Published:	Faculty of Accountancy & Accounting Research Institute (ARI) 2003
Subjects:	Accountants Auditing. Auditors
Online Access:	http://ir.uitm.edu.my/id/eprint/13683/ http://ir.uitm.edu.my/id/eprint/13683/1/AJ_TAKIAH%20MOHD.%20ISKANDAR%20MAR%2003.pdf

id	uitm-13683
recordtype	eprints
spelling	uitm-136832016-07-21T07:45:20Z http://ir.uitm.edu.my/id/eprint/13683/ Materiality judgments on audit opinions / Takiah Mohd. Iskandar Mohd. Iskandar, Takiah Accountants Auditing. Auditors Materiality is an important criterion needed for issuing an audit opinion. However, the guidance as how materiality should be judged is not clear. Research results show that "percentage effect of an item on net profit" is the most important variable in making materiality judgment. However, there is lack of consensus about what is the appropriate threshold. The objective of this paper is to study two important variables, industry type and industry specialization, that may have contributed to the inconsistencies in materiality judgments. The study also attempts to determine the specific threshold used for issuing an audit qualification. Results of an experiment indicate that the threshold for "except for" and adverse opinions are about 9% and 31% respectively. The study finds that the interaction between industry type and industry specialization affects opinion thresholds significantly at p=.004. The study shows that specialists of a particular industry differ from specialists of another industry in their opinion materiality thresholds. Hence, a consideration should be given for the inclusion of more specific guidance in the standards. In the absence of definite guidelines on the appropriate materiality thresholds, auditors have to apply their professional judgments as to the likely threshold that would be appropriate for the different types of audit opinion. Faculty of Accountancy & Accounting Research Institute (ARI) 2003 Article PeerReviewed text en http://ir.uitm.edu.my/id/eprint/13683/1/AJ_TAKIAH%20MOHD.%20ISKANDAR%20MAR%2003.pdf Mohd. Iskandar, Takiah (2003) Materiality judgments on audit opinions / Takiah Mohd. Iskandar. Malaysian Accounting Review, 2 (1). pp. 124-138. ISSN 1675-4077
repository_type	Digital Repository
institution_category	Local University
institution	Universiti Teknologi MARA
building	UiTM Institutional Repository
collection	Online Access
language	English
topic	Accountants Auditing. Auditors
spellingShingle	Accountants Auditing. Auditors Mohd. Iskandar, Takiah Materiality judgments on audit opinions / Takiah Mohd. Iskandar
description	Materiality is an important criterion needed for issuing an audit opinion. However, the guidance as how materiality should be judged is not clear. Research results show that "percentage effect of an item on net profit" is the most important variable in making materiality judgment. However, there is lack of consensus about what is the appropriate threshold. The objective of this paper is to study two important variables, industry type and industry specialization, that may have contributed to the inconsistencies in materiality judgments. The study also attempts to determine the specific threshold used for issuing an audit qualification. Results of an experiment indicate that the threshold for "except for" and adverse opinions are about 9% and 31% respectively. The study finds that the interaction between industry type and industry specialization affects opinion thresholds significantly at p=.004. The study shows that specialists of a particular industry differ from specialists of another industry in their opinion materiality thresholds. Hence, a consideration should be given for the inclusion of more specific guidance in the standards. In the absence of definite guidelines on the appropriate materiality thresholds, auditors have to apply their professional judgments as to the likely threshold that would be appropriate for the different types of audit opinion.
format	Article
author	Mohd. Iskandar, Takiah
author_facet	Mohd. Iskandar, Takiah
author_sort	Mohd. Iskandar, Takiah
title	Materiality judgments on audit opinions / Takiah Mohd. Iskandar
title_short	Materiality judgments on audit opinions / Takiah Mohd. Iskandar
title_full	Materiality judgments on audit opinions / Takiah Mohd. Iskandar
title_fullStr	Materiality judgments on audit opinions / Takiah Mohd. Iskandar
title_full_unstemmed	Materiality judgments on audit opinions / Takiah Mohd. Iskandar
title_sort	materiality judgments on audit opinions / takiah mohd. iskandar
publisher	Faculty of Accountancy & Accounting Research Institute (ARI)
publishDate	2003
url	http://ir.uitm.edu.my/id/eprint/13683/ http://ir.uitm.edu.my/id/eprint/13683/1/AJ_TAKIAH%20MOHD.%20ISKANDAR%20MAR%2003.pdf
first_indexed	2023-09-18T22:50:10Z
last_indexed	2023-09-18T22:50:10Z
_version_	1777417490926665728

Materiality judgments on audit opinions / Takiah Mohd. Iskandar

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