Using Judaic Rules to Develop New Perspectives on Materiality

• In Event: Auditing, Audit Quality, and Materiality

Abstract

The concept of materiality has long affected financial measurement and disclosure through its influence on accountants’ and auditors’ judgments and decisions. The materiality concept is not new, nor is it restricted to accounting and auditing. While crucial in reporting and auditing judgments, materiality is also relevant to independence, conflict of interest, and transparency issues. To add a new perspective to the influence and application of materiality, we discuss the following materiality considerations: preparer intent, user intent, and cost/benefit, and provide Jewish examples for each. These examples demonstrate the complex nature of materiality judgments. By seeing materiality from a different point of view, we hope to help accountants and auditors better understand the materiality concept when applied in an accounting and auditing context.

Authors

• Alan Reinstein, Wayne State University

• Shlomo S. Sawilowsky, Wayne State University

• Eileen Z Taylor, North Carolina State University