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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 university's reported performance against pre-determined objectives, the auditor considers materiality. Which approach is most consistent with how materiality is applied to performance information?

The auditor should weigh both quantitative and qualitative factors, such as the indicator's importance to users and the public interest. A fixed percentage of expenditure is unsuitable for non-financial measures, treating every error as material is impractical, and materiality must be considered at planning rather than after drafting.

  1. AApply a percentage of total expenditure, as in a financial statement audit, and ignore qualitative factors
  2. BConsider both quantitative and qualitative factors, including the significance of the indicator to users and public interestCorrect
  3. CTreat every misstatement in any indicator as material because the information is non-financial
  4. DSet materiality only after the conclusion has been drafted

Explanation

Performance information is often non-financial, so a simple financial benchmark is inadequate. Materiality reflects what influences users' decisions, including the nature of the indicator, its public interest and legislative importance. Treating all errors as material is impractical, and materiality must be set at planning.

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