EFFECT OF AUDIT MATERIALITY THRESHOLDS ON AUDIT REPORT IN NIGERIA

Authors

  • Bassey Eyo Bassey Department of Accounting, Faculty of Management Sciences, University of Calabar, P.M.B. 1115, Calabar, Cross River State – Nigeria Author
  • Peter Kekung Bessong Department of Accounting, Faculty of Management Sciences, University of Calabar, P.M.B. 1115, Calabar, Cross River State – Nigeria Author
  • Charles Effiong Department of Accounting, Faculty of Management Sciences, University of Calabar, P.M.B. 1115, Calabar, Cross River State – Nigeria Author
  • Kalada Ekperi Department of Accounting, Faculty of Management Sciences, University of Calabar, P.M.B. 1115, Calabar, Cross River State – Nigeria Author

DOI:

https://doi.org/10.61841/80rdt138

Keywords:

Audit Materiality, Audit Materiality Thresholds, Audit Report, Overall Materiality, Performance Materiality

Abstract

The role of materiality on audit report nature and quality cannot be overemphasized in the field of auditing. Yet a general consensus on the applicable threshold has been elusive to practitioners and researchers. With this in mind this paper seeks to empirically investigate the effect of audit materiality on audit reports in Nigeria. Three auditing firms were chosen and annual financial data for their clients in the banking industry were collected. The Panel OLS and Granger Causality tests were used to test for materiality threshold effects and variations on audit reports. Three benchmarks were used to calculate audit report quality namely accurateness, two hypotheses were constructed and tested at 0.05 percent level of significance. Both results from the empirical tests shows that materiality thresholds significantly affect audit report in the country. The study concluded that since materiality thresholds are important in influencing the nature of audit report, audit firms should do more to study the financial information of their clients that brought about their conclusions on thresholds used.

 

Downloads

Download data is not yet available.

References

1. Adeniyi A (2012). Auditing and Assurance Services. Value Analysis Consult Isheri Lagos.

2. Beng .W, Jimmy. L, Dan. L and et al (2017). Are Disclosed Auditors Materiality Thresholds Informative of Firms’ Earning Quality? Evidence from the revised ISA 700 Audit Report. Singapore Management University.

3. Daoud. S (2016). Audit Materiality ISA 320. Materiality in Planning and Performing an Audit.

Crowe Horwath Professional Auditors, Lebanon.

4. Effiok, S. O., Tapang, A. T., & Eton, O. E. (2012). The impact of human capital cost on gross domestic product (GDP) in Nigeria. International Journal of Financial Research, 3(4), 116.

5. Effiok, S. O., Tapang, A. T., & Eton, O. E. (2013). The impact of tax policy and incentives on foreign direct investment (FDI) and economic growth: Evident from Export Processing Zones

(EPZs) in Nigeria. European Journal of Commerce and Management Research, 2(9), 191-196.

6. Financial Reporting Council (2009). International Standard on Auditing (UK and Ireland)

7. Financial Reporting Council (2017). Audit Thematic Review Materiality December, 2017. London, England.

8. Granger .C (1969). Investigating Causal Relations by Econometric Models and Cross Spectra Methods. Econometrica, 37, 424 – 38.

9. Hamed, M. (1973). Criteria for Materiality decisions in Accounting. A Statistical Approach

(Published Doctoral Dissertation). Texas Tech University.

10. ICAEW (2017). Materiality in the Audit of Financial Statements. London, United Kingdom.

11. ISA 320. Materiality in Planning and Performing an Audit.

12. ISA 450. Evaluation of Misstatements identified during Audit.

13. Marsel, S. & Ali. S (2015). An Overview of Factors Affecting Auditing Quality in Albania.

Academic Journal of Interdisciplinary Studies, Rome Italy, Vol. 4, No 3.

14. Tapang, A. T., Bessong, P. K., & Ujah, P. I. (2015). Management influence and auditor’s independence in Nigerian Banks. International Journal of Economics, Commerce and Management, 3(4), 1-26.

15. Tapang, A. T., Kankpang, A. K., Inah, E. U., Bessong, P. K., & Uklala, A. P. (2020). Audit Quality Control and its Influence on Audit Report in Nigeria. European Journal of Economics, Finance and Administrative Sciences, (104).

16. Vaclovas, L. & Andrius, M. (2017). Acceptable Audit Materiality for Users of Financial Statements. Vadyba Journal of Management, 31(2)

Downloads

Published

31.10.2020

Issue

Vol. 24 No. 8 (2020): 24 (8) 2020

Section

Articles

License

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

You are free to:

  1. Share — copy and redistribute the material in any medium or format for any purpose, even commercially.
  2. Adapt — remix, transform, and build upon the material for any purpose, even commercially.
  3. The licensor cannot revoke these freedoms as long as you follow the license terms.

Under the following terms:

  1. Attribution — You must give appropriate credit , provide a link to the license, and indicate if changes were made . You may do so in any reasonable manner, but not in any way that suggests the licensor endorses you or your use.
  2. No additional restrictions — You may not apply legal terms or technological measures that legally restrict others from doing anything the license permits.

Notices:

You do not have to comply with the license for elements of the material in the public domain or where your use is permitted by an applicable exception or limitation .

No warranties are given. The license may not give you all of the permissions necessary for your intended use. For example, other rights such as publicity, privacy, or moral rights may limit how you use the material.

How to Cite

Bassey, B. E., Bessong, P. K., Effiong, C., & Ekperi, K. (2020). EFFECT OF AUDIT MATERIALITY THRESHOLDS ON AUDIT REPORT IN NIGERIA. International Journal of Psychosocial Rehabilitation, 24(8), 6867-6878. https://doi.org/10.61841/80rdt138