ACCEPTABLE AUDIT MATERIALITY FOR USERS OF FINANCIAL STATEMENTS
Journal Title: VADYBA - Year 2017, Vol 31, Issue 2
Abstract
Materiality of financial statements is the most significant element of audit, which determines the scope of performed procedures and reliability level of data in financial statements. Having selected the level of materiality the auditor has to assess the significance of misstatements to the users of financial statements. If the materiality is selected not correctly then the risk increases, that adequate procedures will not be performed and financial statements will not meet the expectations of users of financial statements. The aim of the article is to investigate the possibilities of harmonizing materiality expectations of the users of financial statements and materiality value applied by the auditor. In the process of investigation it was determined that the value of materiality accepted by the users of financial statements differs from the one used by auditors. Therefore, the auditor’s opinion about financial statements might not meet the users’ expectations. On the basis of investigation results a test was suggested, which could help to harmonize auditor’s applied materiality with expectations of the users of financial statements. Suggested test could also be used as a new and innovative method to calculate materiality. Suggested alternative way for calculating materiality is very important for future researches and science, because it is new technique to address materiality in a way that suits both, users of financial statements and auditors. This new technique could be used in the future researches searching and examining other materiality determination methods and if they are in the line with users' expectations. Key words: materiality; clearly trivial; users of financial statements; expectations; misstatements; data reliability.
Authors and Affiliations
Vaclovas Lakis, Audrius Masiulevičius
Keywords
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