Auditing Risk, Materiality & Judgement Standards: An International Comparison

Abstract

In A Conceptual Framework for Auditing (Pratt & Van Peursem, 1993) it was argued that audit risk, materiality and judgement are fundamental auditing concepts which should form a part of any conceptual framework. However, it was identified that the New Zealand Society of Accountants treats these issues as guidelines only; they are not treated as fundamental issues. This paper compares the different positions in respect of audit risk, materiality and judgement that have been adopted by the various professional bodies responsible for auditing standards in English speaking Pacific Rim countries and the United Kingdom. Countries included in the study are: New Zealand, Australia, United States of America, Canada, United Kingdom, Singapore, Hong Kong and Malaysia. It is concluded that the tendency in all the standards has been to under‐emphasise these three conceptual issues, despite auditing standards and guideline frameworks that profess interest in broad theoretical issues. As a result, the auditing standards have tended to focus upon procedural ‘how to’ questions rather than more complex questions of ‘why’, or ‘how much’. It is recommended mat the auditing standard setters in all the countries included in this analysis should consider the adoption of a conceptual framework of auditing to better inform the process of standard setting, and to assist the achievement of internal consistency within the standards and guidelines.

Citation

Pratt, M.J. and Van Peursem, K. (1996), "Auditing Risk, Materiality & Judgement Standards: An International Comparison", Managerial Finance, Vol. 22 No. 9, pp. 86-99. https://doi.org/10.1108/eb018582