Materiality Judgment and Audit Evidence in Audit Opinion Accuracy: Evidence from Public Accounting Firms in Sumatra, Indonesia

Abstract

Accurate audit opinions underpin the credibility of financial reporting, reducing information uncertainty and providing a reliable basis for stakeholder decision-making. Yet the extent to which core audit inputs jointly shape opinion accuracy remains under-examined in emerging-market settings. Drawing on the Audit Risk Model, bounded rationality theory, and behavioural decision-making theory, this study examines whether materiality judgment and audit evidence are associated with audit opinion accuracy, and whether audit evidence moderates the relationship between materiality judgment and opinion accuracy. Survey data were collected from 178 auditors across 81 public accounting firms in Sumatra, Indonesia, yielding a response rate of 73.25%, and analysed using multiple regression followed by moderated regression analysis. The results show that both materiality judgment (B = 0.238, p < .001) and audit evidence (B = 0.442, p < .001) are positively and significantly associated with audit opinion accuracy, together explaining 23.8% of its variance (adjusted R² = 0.238). Audit evidence emerged as the stronger predictor. The moderation analysis, however, was not significant (β = 0.026, p = .160), indicating that materiality judgment and audit evidence contribute independently rather than interactively. The study contributes emerging-market evidence that these two audit inputs operate as distinct, additive determinants of opinion accuracy rather than as a combined mechanism. The findings offer practical guidance for public accounting firms and audit-oversight bodies seeking to strengthen audit quality through materiality judgment and audit evidence evaluation.