Considering Multiple Materialities for Account Combinations in Audit Planning and Evaluation: A Cost Efficient Approach

22 Pages Posted: 1 Jun 2016 Last revised: 13 Apr 2017

See all articles by Saurav K. Dutta

Saurav K. Dutta

State University of New York (SUNY) at Albany

Lynford E. Graham

Bentley University

Date Written: March 1, 1998

Abstract

An analytic framework is provided for incorporating different user perspectives on materiality into the audit process. The framework serves as a tool for disaggregating materiality to specific accounts based on materiality criteria for accounts and account combinations. To improve audit efficiency, the planning method incorporates the relative cost of auditing various account balances. It extends existing models of audit risk and materiality by considering explicitly the materiality of account combinations (sums and ratios) to enhance audit effectiveness.

Keywords: Audit Risk, Materiality, Financial Ratios, Aggregation, Evidence

JEL Classification: C11, C13, C15, C44, D83, M40, M41, M49

Suggested Citation

Dutta, Saurav K. and Graham, Lynford E., Considering Multiple Materialities for Account Combinations in Audit Planning and Evaluation: A Cost Efficient Approach (March 1, 1998). Journal of Accounting, Auditing and Finance, Vol. 13, No. 2, 1998, Available at SSRN: https://ssrn.com/abstract=2787094

Saurav K. Dutta (Contact Author)

State University of New York (SUNY) at Albany ( email )

135 Western Ave
Building, Room 109
Albany, NY 12222
United States

Lynford E. Graham

Bentley University ( email )

175 Forest Street
Waltham, MA 02145
United States

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