Alan Reinstein and Myles Stern accepted for publication in Today’s CPA
Mike Ilitch School of Business George R. Husband Endowed Professor of Accounting Alan Reinstein and Associate Professor of Accounting Myles Stern have had an article accepted for publication in Today’s CPA, a magazine by the Texas Society of CPAs, which focuses on issues, trends and developments affecting CPAs, employers, clients and employees.
The article is titled “Helping Auditors Add Critical and Key Audit Matters to Audit Reports.”
Materiality is a critical and challenging auditing concept. To help auditors improve their materiality judgments, we provide Judaic examples arising from its longevity, richness and variety of its stories. We show how Judaism interprets and applies materiality in many contexts, and provide guidance on how auditors might apply these lessons to improve their materiality judgments. We examine five areas where Judaic examples can inform modern auditing: (1) considering both quantitative and qualitative measures; (2) recognizing that small quantitative changes can lead to material qualitative effects; (3) understanding that ignoring small issues can become a slippery slope; (4) considering the importance of financial statement users’ needs in developing materiality criteria; and (5) prioritizing substance over form. In all examples, context is a critical factor to consider when applying materiality.