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Source: Journal Citation ReportsTM from ClarivateTM 2022

Entrepreneurship and Sustainability Issues Open access
Journal Impact FactorTM (2022) 1.7
Journal Citation IndicatorTM (2022) 0.42
Received: 2018-03-18  |  Accepted: 2018-05-03  |  Published: 2018-09-30

Title

Differentiation of performance materiality in audit based on business needs


Abstract

Companies are exposed to various risks. Failure to identify and eliminate them may aggravate the development of companies, some of which may be forced to cease operation. Audit can help in revealing the majority of risks. The auditor has an unlimited access to the information, operational strategy, and in some cases even to commercial secrets, of the auditee. Auditor collects a large amount of different information about the company, but it is used only as much as necessary for formulating a conclusion about financial statements. Upon a closer cooperation of the auditor with the persons in charge of the governance of the audited entity, the client needs can be identified and, once the audit plan is slightly revised, the areas that are within the interest of the client can be analysed in more detail. This article aims to investigate the determination of performance materiality in audit to separate classes of transactions based on the principal areas of importance identified by the business undergoing audit. Based on the data collected during the study, a modified model for determining performance materiality in audit was created which can help to identify better the current and potential risks of the distinguished areas. The application of this model enables carrying out an audit in the areas which are of the highest importance to the users of the audit results more effectively and providing them with more detailed information in the management letter. This would help to identify the substantial risks of the auditee in more detail and on time.


Keywords

materiality, audit, risks, tolerable error, management letter


JEL classifications

M42


URI

http://jssidoi.org/jesi/article/212


DOI


HAL


Pages

115-124


This is an open access issue and all published articles are licensed under a
Creative Commons Attribution 4.0 International License

Authors

Masiulevičius, Audrius
Vilnius University, Vilnius, Lithuania https://www.vu.lt
Articles by this author in: CrossRef |  Google Scholar

Lakis, Vaclovas
Vilnius University, Vilnius, Lithuania https://www.vu.lt
Articles by this author in: CrossRef |  Google Scholar

Journal title

Entrepreneurship and Sustainability Issues

Volume

6


Number

1


Issue date

September 2018


Issue DOI


ISSN

ISSN 2345-0282 (online)


Publisher

VšĮ Entrepreneurship and Sustainability Center, Vilnius, Lithuania

Cited

Google Scholar

Article views & downloads

HTML views: 4341  |  PDF downloads: 1698

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