Materiality is fundamental to an audit and is applied in planning and performing audits, as well as evaluating the effect of misstatements on the accounts. Auditors are required to use judgment to determine materiality and in considering whether misstatements are material. This judgment is affected by auditors’ perceptions of the financial information needs of users of the accounts, and the size or nature (or both) of misstatements. Whether businesses are experiencing a temporary downturn or more permanent changes, business environment and economic changes are likely to impact how materiality in audits is determined by auditors and the choice of benchmarks used.

Download Flyer