What are the key factors that should be considered in determining whether a financial statement amount...
What are the key factors that should be considered in determining whether a financial statement amount is 'material'? Should auditors apply the same materiality guidelines or benchmarks as financial accountants?
Homework Answers
Following are the key factors which determine the materiality of amount in financial statements:-
1. The comparative size of the misstatement.
2. The nature of the misstatement.
3. Relationship to the other misstatement.
4.The inherent character of the mistake.
Materiality guidelines of financial accountant and auditor may or may not be the same. It depends upon case to case basis. If the organisation is big then auditor can increase the materiality Similarly, if the organisation is small, auditor can decrease the materiality.
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