How Do Auditors Determine What’s Material?

U.S. public company audits all include a simple step to determine whether an amount is large or significant for their clients, otherwise known as materiality.  This decision influences the planning and procedures of the other facets of the audit as well as many judgments by both the auditor and manager about how to interpret misstatements and discrepancies in financial reporting and auditing.  In essence, it is the backbone of financial reporting and auditing but kept confidential from investors and often managers (i.e. not publicly disclosed) in the U.S., unlike the UK.  We access proprietary data from the Public Company Accounting … Read more