Determination of Materiality in Financial Statement Audit in the Context of Digitalization of Accounting Processes

Abstract

In the modern context of digitalization and increasing financial risks, the study of the role of independent audit in detecting material misstatements and preventing fraud in financial reporting is of particular importance. The aim of the study is a comprehensive examination of issues related to the independent audit of financial statements, focusing on the determination of materiality of errors, the auditor's role in detecting fraud, and enhancing trust in financial information. The research analyzes theoretical and methodological approaches to assessing materiality, characterizes the tools used by independent auditors, and explores the concept of the fraud triangle as an effective analytical instrument in the context of preventing financial violations. The methodological foundation includes elements of the risk-based approach, logical analysis, deduction, and critical generalization, which enabled the systematization of factors influencing the objectivity of audit procedures. The article highlights the significance of professional ethics and auditor independence as fundamental prerequisites for effective identification of material misstatements in financial reports, and emphasizes the implementation of technological tools in audit practice, particularly software for financial data analytics and evaluation of internal control systems. A relationship is established between high-quality auditing, the effectiveness of corporate governance systems, and the level of financial transparency. Particular attention is paid to the practical application of quantitative and qualitative criteria for materiality, fraud risk analysis, and methods of documentary justification for the auditor’s opinion. The study develops practical recommendations for improving approaches to identifying material misstatements, enhancing audit quality by strengthening internal control systems, and expanding analytical procedures under the conditions of financial reporting digitalization. The results have significant theoretical and practical potential for improving auditing practices, developing professional standards, and advancing anti-corruption mechanisms in the field of financial oversight. The findings of the study can be used to increase the effectiveness of independent audit as an instrument of trust in the context of globalization and the digital transformation of the economic environment.