Assessing the Relationship Between Audit Planning Quality and Material Misstatement Detection Rates

Posted: Aug 31, 2021

• Amara Benson
• Owen Craig
• Chase Howard

Abstract

The quality of audit planning represents a fundamental determinant of audit effectiveness, yet empirical evidence quantifying its relationship with material misstatement detection remains surprisingly limited. Traditional audit research has predominantly focused on input factors such as auditor experience, firm size, and industry specialization, while the planning process itself has remained somewhat of a black box. This research gap is particularly concerning given that professional standards explicitly mandate comprehensive planning as a cornerstone of audit quality. The auditing literature has long acknowledged the theoretical importance of planning, but operationalizing and measuring planning quality has proven methodologically challenging. Our study addresses this critical gap by developing a novel computational approach.