Page 43 - Day 2 - Planning an Audit
P. 43

THE NATURE OF MATERIALITY





            • Materiality is Subjective – It is not a defined


                concept, professional judgement plays a big role in

                deciding materiality.




            • Materiality is Relative – Materiality will vary from

                user to user and from client to client. What's


                material to a small firm may be totally insignificant


                to an international conglomerate.



            • Materiality                      can            be          both             quantitative                      and


                qualitative. Quantitative (above a certain number)


                and Qualitative (an example would be related party

                disclosures/ fraud involving small amounts)




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