Auditor Materiality Threshold and Audit Quality—Evidence from the Revised ISA 700 in the United Kingdom

SYNOPSIS Using a broad sample of U.K. firms that are required to disclose auditor materiality thresholds under the International Standards on Auditing (United Kingdom and Ireland) 700, we examine whether threshold is associated with audit quality. We document lower higher quality, as measured by absolute discretionary accruals, accruals propensity just meet or beat analysts’ earnings expectations. also find some evidence negative association between quality attenuated when committee more effective economically dependent client, pronounced management has stronger incentive manage earnings. Overall, our study extends limited studies large-sample archival implications outcomes. Data Availability: available from public sources cited in text. JEL Classifications: M40; M41; M42.