main objective of the auditor is to express an opinion on the financial statements and the correctness of accounting.But to produce a reasoned opinion must have accurate and the volume of information and based on it to be able to draw the right conclusions.What also plays a significant role in the audit?In fact, it is extremely important, because of what will be the main criteria for assessing the financial performance of the economic entity, independent and faithful to the conclusion, and hence the reputation of the audit organization.
Thus, materiality in the audit - is the amount of allowable distortion and error, which is considered the maximum.Set this value to ensure reliable judgments and assess the reliability of financial reporting.The auditor may recognize the results of distortion irrelevant if they do not significantly affect the final result of the enterprise.At the same time, the materiality in the audit should be viewed from two perspectives - qualitative and quantitative.In the first case, a specialist based on their own opinion by comparing the degree of deviation of actual transactions on the order specified in the regulations.This is a fairly subjective notion, unsupported by calculations and precise figures.In the second case, the auditor examines the total amount of errors and deviations, as well as studying each one separately, then compare to the set level of materiality.
specialist conducting the audit, the right to establish a general rule of materiality or to develop specific indicators for each article reporting.The decision he must make in the planning stage test, recorded in writing with obligatory note in the overall audit plan.However, materiality in the audit concept is not entirely accurate and unchanged.If, at the main work will be detected circumstances under which there will be a basis for change in this indicator, the auditor has the right to make such changes in the working documents in consultation with the head of the inspection.
There are two basic approaches to the determination of materiality:
- inductive;
- deductive.
The first involves identifying the materiality of each balance sheet, then the sum of these indicators, which would constitute the overall materiality.The second approach is the opposite, and is based on the establishment of the total, and then there is a distribution of certain items of its balance sheet.Specialist independently decide on the choice of a particular method of working.In many ways, the audit risk is measured by the index of materiality.
Upon immediate inspection, the auditor evaluates and qualitative and quantitative aspect.That is, if the total errors and distortions do not exceed the level of importance, as well as qualitative deviations from the procedure specified in the regulations, are considered non-essential, the specialist can make a conclusion that the statements present fairly, in all respects.If the size of the common mistakes and distortions of much more significance level set value and quality deviations are recognized significant, the auditor is obliged to conclude that the unreliability of all documentation.
In practice, there are cases that can not be unequivocal judgment.For example, when the amount of the error is greater than or less than the level of importance, but in general close to him, and the quality of distortion can not be clearly defined as a significant, professionals have to take responsibility and make a conclusion based on their own judgments.Typically, in such situations, he appeals to the head of the company with a proposal to fix identified briskly and deviations from regulations.If the customer refuses to do so, the auditor shall be entitled on the basis of the data available to prepare the audit report, other than absolutely positive.Thus, materiality in the audit plays an important role, and this figure should be considered in the course of any inspection.
