Industry type: a factor in materiality judgements and risk assessments

Takiah M. Iskandar (Lecturer, Department of Accounting, National University of Malaysia)

Managerial Auditing Journal

ISSN: 0268-6902

Publication date: 1 April 1996

Abstract

The absence of clear guidelines as to how materiality should be judged has created problems for accountants and auditors, and resulted in risks to users of financial statements. Results of past research indicate a great lack of consensus within a judgement group (e.g. auditors) and a large degree of diversity between groups (e.g. auditors v. statement preparers), with respect to the appropriate materiality threshold. Based on past research concludes that industry, an important contextual variable in materiality judgements, may be responsible for the inconsistencies in judgements in the past. The close relationship between materiality and audit risk suggests that the type of industry may have a similar impact on risk assessments. Proposes that industry effects on materiality judgements and risk assessments be further investigated. Also suggests the need for industry‐specific guidelines for materiality and audit risk.

Keywords

Citation

Iskandar, T. (1996), "Industry type: a factor in materiality judgements and risk assessments", Managerial Auditing Journal, Vol. 11 No. 3, pp. 4-10. https://doi.org/10.1108/02686909610115196

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Publisher

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MCB UP Ltd

Copyright © 1996, MCB UP Limited

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