With ‘material’ or without

Auditors in the USA qualify their auditors’ reports with ‘in all material respects,’ but not in the UK.

Why is there a difference? Is it important? Perhaps it is just a convention. Or just another auditor’s trick. Yet these same auditors in the same audit firm apply ‘in all material respects’ in their audit reports in USA, but not in the UK. 

I suppose this relates to what I call the ‘Starbucks syndrome’. When you buy a coffee in Starbucks there is a warning on the paper cup:

 “Careful the beverage you are about to enjoy is extremely hot!”

You know it is hot, even extremely hot, because that’s what coffee is and that’s what you ordered. If it was cold you would complain. Nobody reads the warning anyway. The writing is small and at the bottom of the cup. If you try to read it, you spill the coffee and burn your fingers.

‘In all material respects’ is the same. You know the financial statements are presented fairly because the auditors state it. That’s what an unqualified audit report is all about.  If there were minor errors you wouldn’t care less. They are not significant. If there were material errors, the auditors would not state that the financial statements were presented fairly, would they?

They don’t need to state ‘in all material respects’, yet they do, to show they are being open, excessively prudent and clear with the reader, if he or she decides to read it, because like the Starbuck’s warning, nobody ever reads audit reports anyway.