Question

What is materiality? What does materiality have to do with autiing? If you were auditing rascal's pizza restaurant, whywould materiality matter?

Answer 1

Materiality is a concept auditing and accounting relating to the importance/significance of an amount, transaction, or discrepancy. The objective of an audit of financial statements is to enable the auditor to express an opinion whether the financial statements are prepared, in all material respects,

In a simple sense, an amount of rupees ten would be immaterial as an individual item, but those tens together as a huge amount will make a considerable difference.

In the auditing, materiality have a lot to do with, because it influences the decission makers.

In any type of audit (rascal's pizza restaurant) materiality has no restricted boundaries to explain with, a particular amount may not be material to one business but the same is material to other and influences the decission making.