Materiality in Audit Planning

Determining What Matters

Materiality represents the magnitude of a misstatement that could reasonably influence the decisions of financial statement users. Auditors establish planning materiality early in the audit and revise it if circumstances change.

• Materiality affects audit scope.
• Lower materiality generally requires more audit evidence.
• Materiality involves both quantitative and qualitative considerations.
• Performance materiality is set below overall materiality.