Audit 5.0 in Risk and Materiality Assessment: An Ethnographic Approach
Abstract
1. Introduction
2. Audit Quality in Financial Auditing: Theoretical Framework
2.1. Key Risks to Audit Quality
2.2. Risk Assessment in Auditing
2.3. Determination of Materiality in Auditing
2.4. Materiality vs. Risk Assessment
3. The Era of Smart Auditing
3.1. Audit 5.0 in Risk Assessment
3.2. Audit 5.0 in Materiality Determination
4. Research Methodology
5. Analysis in the Context of Audit 5.0
5.1. Ethnography of Auditing Practice
5.2. Risk Assessment and Materiality
6. Discussion
7. Final Considerations
Author Contributions
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Conflicts of Interest
References
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Dimension | Technology | Human Judgment |
---|---|---|
Tools and Systems | ASD, anomaly detection algorithms, automation of confirmations | Interpretation of system-generated data, critical selection of relevant areas |
Risk Assessment | Systematic data analysis, standardization of procedures according to ISA | Business knowledge, judgment on specific risks, strategic weighting |
Materiality Determination | Application of automated quantitative criteria | Qualitative assessment, sector context, entity history |
Team Organization and Structure | Digitization of working papers, traceability of actions | Mentorship, progressive delegation, transmission of tacit knowledge |
Audited Areas | Automation of repetitive and low value-added tasks | Assessment of fixed assets, impairments, and complex accounting estimates |
Quality and Supervision | Automatic review systems, compliance with regulations | Culture of systematic review, continuous supervision |
Professional Development | Requirement of digital skills, use of digital training platforms | Continuous training, situational learning, and critical adaptation to new technologies |
Dimension | Description | Impact on Risk and Materiality Assessment | Practical Example |
---|---|---|---|
Technology | Integration of software and AI in auditing | Automation of tasks and anomaly detection | Use of ASD for automatic opening of analysis areas |
Professional Judgment | Decisions based on critical and ethical analysis | Qualitative and contextual risk assessment | Asset impairments require interpretation beyond algorithms |
Organizational Structure | Functional hierarchy and situational learning | Transfer of tacit knowledge and validation of decisions | Senior supervision in operational flow analysis |
Human Interactions | Team communication and collaboration | Validation of critical decisions and consistency in standards application | Discussion of complex cases (e.g., financing contracts) |
Organizational Culture | Emphasis on rigor, quality, and ethics | Strengthens risk management and internal control | Well-documented circularizations and cut-offs |
Emerging Risks | Cybersecurity, data protection, and ESG | Broadening of the materiality concept | Increasing relevance of environmental and reputational factors |
Auditor Profile | Technical, digital, and ethical competencies | Demand for a hybrid and critical role | Adapting to ethical technology use and sensitive judgment |
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Tavares, M.C.; Almeida, M.F.R.; Vale, J.; Kapo, A. Audit 5.0 in Risk and Materiality Assessment: An Ethnographic Approach. J. Risk Financial Manag. 2025, 18, 419. https://doi.org/10.3390/jrfm18080419
Tavares MC, Almeida MFR, Vale J, Kapo A. Audit 5.0 in Risk and Materiality Assessment: An Ethnographic Approach. Journal of Risk and Financial Management. 2025; 18(8):419. https://doi.org/10.3390/jrfm18080419
Chicago/Turabian StyleTavares, Maria C., Maria F. R. Almeida, José Vale, and Amra Kapo. 2025. "Audit 5.0 in Risk and Materiality Assessment: An Ethnographic Approach" Journal of Risk and Financial Management 18, no. 8: 419. https://doi.org/10.3390/jrfm18080419
APA StyleTavares, M. C., Almeida, M. F. R., Vale, J., & Kapo, A. (2025). Audit 5.0 in Risk and Materiality Assessment: An Ethnographic Approach. Journal of Risk and Financial Management, 18(8), 419. https://doi.org/10.3390/jrfm18080419