Page 13 - PowerPoint Presentation

IMPORTANT ELEMENTS OF THE AUDIT PROCESS

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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