Audit Materiality Level,Accounting Firm Size and Audit Opinion

Based on the data of 845 registrants announcing restatements from 1999 to 2005,the paper discusses the relationship among audit materiality level,audit firm size and audit opinion. The results indicate that audit materiality level has impacts on the types of audit opinion and listed firms whose accounting errors of financial statement are beyond the audit materiality level are more likely to get modified opinions. Besides these,there is also a positive relation between audit firm size and the probability of giving modified opinion. It supports the conclusion that big accounting firms give stricter audit opinions and provide better audit service.