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ACCA Strategic Professional · Advanced Audit and Assurance (International) · The audit of performance information (pre-determined objectives) in the public sector

In planning an audit of a public sector entity's performance information, which objective for determining materiality is most appropriate?

Materiality should combine quantitative size with qualitative factors, such as public interest and how significant the objective is to users. A purely financial benchmark suits monetary figures poorly, and materiality must be set during planning, not adjusted after errors are found.

  1. AUse a fixed percentage of total expenditure only, as for the financial statements
  2. BConsider qualitative factors such as public interest and the significance of the objective to users, as well as quantitative sizeCorrect
  3. CTreat all misstatements as immaterial if the entity achieved its overall mission
  4. DSet materiality after fieldwork based on the number of errors found

Explanation

Performance information is often non-monetary, so a financial benchmark alone is unsuitable. Materiality is judged by what would influence users, taking account of public interest, the nature of the objective and the size of any error. Setting it after fieldwork or ignoring errors would undermine planning.

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