Public administration theory suggests that increased accountability in the public sector influences the auditor to lower materiality levels; thereby increasing the audit sample size; which decreases the likelihood of an inappropriate opinion. Accounting theory posits that engagement risk leads the auditor to lower materiality levels to decrease the likelihood of rendering an inappropriate opinion, in an effort to avoid litigation. The results of this study indicate, that in public sector entities, accountability guides the auditors’ materiality decisions.
Sinason, D.H. (2000), "A study of the effects of accountability and engagement risk on auditor materiality decisions in public sector audits", Journal of Public Budgeting, Accounting & Financial Management, Vol. 12 No. 1, pp. 1-21. https://doi.org/10.1108/JPBAFM-12-01-2000-B001Download as .RIS
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