The association between European materiality estimates and client integrity, national culture, and litigation

Document Type

Article

Publication Title

International Journal of Accounting

Publication Date

1-1-2001

Abstract

The research examines the differences in materiality estimates for a sample of 181 experienced auditors from Big-Six firms located in Denmark, Ireland, Italy, Spain, Sweden, The Netherlands, and the UK. We asked each auditor to estimate materiality for a client whose integrity his/her firm rated as either high or low [Ir. Account. Rev. 1 (1994) 1.]. The research found that low client-integrity ratings resulted in lower materiality estimates for the European auditors. The research also indicates that as the cultural construct of Uncertainty Avoidance [Hofstede, G. (1980). Culture's consequences. Beverly Hills: Sage.] increased, materiality estimates also increased. Although one might have anticipated that materiality would decrease with the level of litigation, it, in fact, increased. We also compared the data from the western European countries with the estimates from a group of 83 auditors from the same Big-Six firms located in the United States.1 © 2001 University of Illinois. All rights reserved. © 2001 University of Illinois. All rights reserved.

Volume

36

Issue

4

First Page

459

Last Page

483

DOI

10.1016/s0020-7063(01)00122-4

ISSN

10944060

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