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

When planning the audit of a public sector education department's performance information, the audit team debates how to set materiality. Which approach is most consistent with good practice for this engagement?

Materiality should combine quantitative and qualitative factors, considering the nature of each indicator and the information needs of users such as legislators and the public. A budget percentage alone is inadequate, and materiality cannot be omitted or set only after fieldwork reveals errors.

  1. AConsider both quantitative and qualitative factors, including the information needs of users such as legislators and the public, and the nature of each indicatorCorrect
  2. BUse only a percentage of the department's total budget
  3. CApply no materiality, since non-financial information cannot be misstated in a measurable way
  4. DSet materiality after the fieldwork is complete based on errors found

Explanation

Materiality for performance information depends on both quantity and quality, and on what influences users' decisions, such as legislators and citizens. A budget percentage alone ignores qualitative significance. Non-financial information can be misstated, and materiality must be set at planning, not afterwards.

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