BU477 Study Guide - Midterm Guide: Financial Audit, Internal Audit, Audit Evidence
Document Summary
Lo1: understand and apply the concept of materiality to the audit. Misstatements/ omissions are considered to be material if (individually or in aggregate) could reasonably be expected to influence the economic decisions of users. If a material error is identified & management refuses to correct, a modification must be made to the audit. Judgement about: materiality are made in light of surrounding circumstances and are affected by the size/ nature of a misstatement, matters (material) to users are based on a consideration of financial information needs of users as a group. Materiality is relative rather than absolute- to small company may not be material to a large company. Qualitative vs. quantitative (small qualitative can be material, ie. gas emission limit) Lo2: use professional judgement to determine overall (or planning) and performance materiality. Determining materiality for the fs as a whole (public offerings, sale of business, going concern) Are there items of which the users tend to focus on.
