Presentation of a Strategic and Causal Model of Audit Materiality in Iran's Financial Market

Abstract

Objective: The present study aims to propose a strategic and causal model of audit materiality in Iran's financial market. Methodology: This study is applied in purpose and descriptive-analytical in nature. It employs a qualitative approach. The statistical population includes three groups: certified accountants, university professors, and active auditors. Using the snowball sampling method and achieving theoretical saturation, 11 individuals were selected. The data collection tool was a semi-structured interview derived from theoretical foundations. The analysis was conducted using grounded theory. Findings: The findings of this study are explained in two categories: strategic and causal factors. The strategic factors include attention to the elements and nature of financial statements, specialization in auditing, expanding standards, and fully aligning financial statements with the benchmark of accounting standards. Additionally, based on the study's findings, the main causal categories identified are determining the materiality level based on the selected criteria (usually expressed as a percentage), the basis of choices and decisions (interpreted as a description of applied judgment), ethical and behavioral characteristics of the auditor, and compliance or non-compliance with financial laws, regulations, and bylaws. Conclusion: This study, by presenting a strategic and causal model, demonstrated that audit materiality in Iran's financial market is influenced by factors such as specialization, standard alignment, and auditors' behavioral traits. These findings can contribute to improving audit judgments and financial reporting.