Materiality
Financial Dictionary — Auditing
Definition
Materiality is the magnitude of an omission or misstatement that could influence users’ decisions.
Detailed Explanation
Materiality guides audit planning and evaluation of misstatements; both quantitative and qualitative factors are considered.
Common Uses
- Used in audit planning to understand risks and design procedures.
- Used during testing (controls/substantive) and documentation of audit evidence and conclusions.
- Used during testing (controls/substantive) and documentation of audit evidence and conclusions.
Practical Example
- Example: The auditor references **Materiality** when designing procedures and documenting conclusions in the audit file.
Why This Term Matters
- Why it matters: Supports high-quality, defensible audit conclusions and helps detect material misstatements and control weaknesses.