Materiality Thresholds Defined by Courts: The UK Evidence

Abstract

Materiality is an ill‐defined yet important concept in auditing. However, lack of an auditing guideline exposes auditors to possible litigations due to failure to detect material misstatement in the financial statements. This paper assesses decisions by UK courts on materiality thresholds. The results from 28 selected cases failed to reveal any consistency in the adoption of materiality thresholds. A guideline is urgently needed by the Auditing Practices Board to increase consistency in decisions on material transactions/events.

Citation

Gin Chong, H. and Vinten, G. (1994), "Materiality Thresholds Defined by Courts: The UK Evidence", Journal of Financial Crime, Vol. 2 No. 3, pp. 234-255. https://doi.org/10.1108/eb025650