Preeti Choudhary on Materiality Judgments

Preeti Choudhary, associate professor of accounting at the University of Arizona, joins the Business Scholarship Podcast to discuss her recent paper Auditors’ Quantitative Materiality Judgments: Properties and Implications for Financial Reporting Reliability. In this paper, Choudhary and her co-authors use PCAOB examination data to quantify auditors’ materiality judgments. Their findings examine the effect of materiality judgments on financial-statement reliability and dispel the myth that auditors simply apply a 5%-of-net-income heuristic.