Question

What is considered material by you may not be material from your fellow auditors’ perspective. You will explore how to determine what materiality levels are so that your audit team is in agreement. Throughout an audit, for all purposes, the material amount is defined as $500,000. Do you think that one materiality amount can be set for an entire company? If so, is $500,000 too high or too low? If you disagree, what would be your suggestion for determining materiality? Explain your reasoning.

Answer 1

Answelt In determining materiadily for the audit, a discussion present in the financial reporting framework provides a Reference to the audi-loxs, The auditor's determination de materiality is a menteri do professional judgement and is albeeted by the auditor's perception de the financial informarlion needs of users of the -financial statement. I By the auditor the concept of materially is applied in planning and performing the audit and in Evaluating the elitect ds rodentified misstatererls on audit and do Uncome-led miss-latemerts, if any on the financial Starlement and in forming the opinion in auditor's report. The auditor shall determine materialinly for the -financial statements as a whole, when establishing the :: overall audit strategiya If in the specific circumstances of the entity, there is one or morc particellay dacses d transactions ,

account balances or disclosuys, for which miestadumunta @ do lesser amounts, than the materiality for the financial statements as a whole could reasonably be expected to influence the economic decisions d users taken on the bacis ds the financial statements, the auditor shall also determine the materiality level of levels to be applied to those particular classes d transactions, account balances o disclosures.