Question

QUESTION

Define the meaning of the term “materiality” as it is used in accounting and auditing.

What is the relationship between materiality and the phrase “reasonable assurance” used in the auditor’s report?

Answer 1

Answer :-

Materiality is characterized as:

the size of an exclusion or error of bookkeeping data that, in light of the encompassing conditions, makes it plausible that the judgment of a sensible individual depending on the data would have been changed or affected by the oversight or misquote.

Relationship between materiality and the phrase “reasonable assurance” used in the auditor’s report :-

• "Acquire sensible confirmation," as utilized in the review report, implies that the reviewer does not ensure or guarantee the reasonable introduction of the monetary proclamations.
• There is some hazard that the monetary explanations contain a material error.