Materiality in Auditing Essay Example | Topics and Well Written Essays - 250 words

Materiality in Auditing - Essay Example Due to economic turmoil, every company has become more conscious about financial statements and auditing. The mission of the financial audit is to offer credible information for the effectiveness of the decision making process. In auditing function, materiality is an important concept. As per the Council for International Accountancy Standard (IASB), materiality is defined as a â€Å"general code for drawing up and presenting financial statements† (Maria & Franca, n.d.). Materiality is regarded as a financial misstatement. The variation is amid the budgeted and actual cost on the basis of the material purchased. Varied financial institutions and organizations have used materiality to make auditing report perfect (Fields, 2011). Therefore, Financial Accounting Standard Broad has renounced quantitative guidelines for determining materiality in auditing. In general auditing of a company is to provide a fair image of the financial statement. Nowadays, every private organization us e materiality to maintain secrecy in financial accounting statements. With the help of auditing systems financial institutes has minimized materiality in company’s financial statements (Baietti & et. al., 2012). It has been minimized by implementing the concept of materiality in the planning as well as final process. Materiality relies on various aspect of element considering situations of erroneous omission or presentation. The objective of this paper is to highlight materiality importance in auditing. Moreover, this study also highlights recent audit regulation, changed audit practice in relation to disclosure of materiality. The audit represents a professional reasoning that can be applied in any domain. The main purpose of discrepancies reported is to control some corrective measures necessary for reduction or elimination of identified discrepancies. The materiality concept depends upon dimension of element or an error