SEC Advisor: Materiality and Audit Adjustments
- Topics:
- Audits
- Tags:
- Accounting,
- Advisor,
- Audit,
- Finance,
- Financial Accounting,
- Financial Services,
- Misstatement,
- Operational Accounting,
- SEC
- Source:
- The CPA Journal
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Overview: Perhaps the most authoritative definition of materiality is found in Financial Accounting Concepts Statement 2, Qualitative Characteristics of Accounting Information: “The magnitude of an omission or misstatement of accounting information that, in the light of surrounding circumstances, makes it probable that the judgment of a reasonable person relying on the information would have been changed or influenced by the omission or misstatement.” Because materiality is the foundation of almost all judgments made during an audit and because it is so vaguely defined, there is enormous latitude and variation in its application. The increased insight into management’s accounting methods and attitudes gives audit committees a clearer picture of management performance. For more details refer the article.
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Format: HTML | Date: Apr 2002 | Pages: 1
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