Bambang Leo Handoko
ABSTRACT
Materiality has a significant role in the course of accounting, especially when it comes to auditing. It helps the auditor by holding the limitations of time and resources of the auditor's capabilities in evaluating the financial misstatements. The amount of audit procedures and evidence is determined depending on the materiality of misstatements. However, some cases have shown that misstatements that happened below the materiality could eventually lead to a financial shenanigan. Our quantitative research tries to analyze the factors that could affect materiality level. We use agency theory as the foundation of this research. Several variables that relate to the auditor's judgment of materiality are used to gain an understanding of its impact on materiality considerations. We use primary data from audit questionnaires and perform a statistical analysis to assess our hypothesis. The results suggest that the auditor's ability to understand audit risk, auditor's competency, and fuzzy logic analysis have a significant effect on the materiality level consideration. More than that, this research also suggests that fuzzy logic analysis could be used to help auditors in determining materiality level and it is able to drive qualitative factors of materiality.
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Index Terms
- The Impact of Understanding Audit Risk, Auditor's Competency, and Fuzzy Logic Analysis to Materiality Level Consideration
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