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    At.2506 Determining Materiality

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    The document discusses the concept of materiality in auditing. It defines materiality and how it relates to an auditor's objectives and audit risk. It also discusses how to determine materiality levels, including using benchmarks and percentages, and how to apply materiality to particular financial statement items and determine performance materiality.

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    At.2506 Determining Materiality

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    137 views26 pages
    The document discusses the concept of materiality in auditing. It defines materiality and how it relates to an auditor's objectives and audit risk. It also discusses how to determine materiality levels, including using benchmarks and percentages, and how to apply materiality to particular financial statement items and determine performance materiality.

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    The document discusses the concept of materiality in auditing. It defines materiality and how it relates to an auditor's objectives and audit risk. It also discusses how to determine materiality levels, including using benchmarks and percentages, and how to apply materiality to particular financial statement items and determine performance materiality.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    137 views26 pages

    At.2506 Determining Materiality

    Uploaded by

    awesome bloggers
    The document discusses the concept of materiality in auditing. It defines materiality and how it relates to an auditor's objectives and audit risk. It also discusses how to determine materiality levels, including using benchmarks and percentages, and how to apply materiality to particular financial statement items and determine performance materiality.

    Copyright:

    © All Rights Reserved
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    You are on page 1of 26

    Professional Review and

    Training Center (PRTC)

    Determining Materiality
    (AT.2506)

    Leomar R. Cabarles
    Concept of
    Concept of Materiality
    Materiality
    Materiality and
    Materiality and Auditor’s
    Auditor’s Objectives
    Objectives

    Reasonable
    assurance

    Auditor IAR
    F/S
    free from material
    misstatement
    Materiality in
    Materiality in Audit
    Audit

    Smallest aggregate misstatement

    Could be material

    To any one of the F/S


    Materiality vs.
    Materiality vs. Other
    Other Concepts
    Concepts

    Materiality

    Audit Risk
    Audit Procedures
    Audit Evidence
    Materiality Levels
    Materiality Levels
    Benchmark and
    Benchmark and Percentage
    Percentage (%)
    (%)

    • Benchmark = F/S
    information which users
    base on in decision making

    • Percentage (%) = level of


    misstatement judged to be
    material

    Users’ information needs drive materiality


    Particular F/S
    Particular F/S Items
    Items Materiality
    Materiality
    Performance Materiality
    Performance Materiality
    Performance Materiality
    Performance Materiality
    Revision of
    Revision of Materiality
    Materiality
    Not a materiality; rather, a cutoff for
    unimportant misstatements
    Materiality Levels
    Materiality Levels and
    and CTMT
    CTMT Summary
    Summary

    D Whole F/S Items


    O Materiality Particular F/S Items
    U
    C Materiality
    P
    U D
    M A
    E Performance Performance T
    N materiality materiality E
    T (Tolerable (Tolerable D
    E Misstatement) Misstatement)
    D

    Clearly trivial misstatement threshold

    Professional Judgment
    Application of
    Application of Materiality
    Materiality
    F/S Level Materiality = P24,000
    Application of
    Application of Materiality
    Materiality
    DIY Drill Answers
    DIY Drill Answers
    DIY Drill Answers
     end of AT.2506 

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