Materiality Flashcards
1. What is materiality 2. Performance materiality 3. Materiality in practice.
1
Q
what is materiality
A
misstatements or omissions that can influence the economic decisions of users on the basis of the P.S
CAN BE INDIVIDUAL OR AGGREGATE
2
Q
performance materiality
A
- set by the auditor at less than materiality
- To reduce probability undetected errors are material
- Used for determining sample sizes
3
Q
Materiality in practice (MIP)
A
used during audit to decide if figure balance or the misstatements are material
4
Q
MIP : P.B.T
A
5%
5
Q
MIP : GP
A
0.5-1 %
6
Q
MIP : Revenue
A
0.5 - 1%
7
Q
MIP: Total Assets
A
1-2%
8
Q
MIP : Net assets
A
2-5 %
9
Q
MIP: P.A.T
A
5-10 %
