Auditing: Materiality

by Steve Collings

Part of a series on 2024-25 Auditing Updates. Materiality in an audit of financial statements is critical and also wholly judgemental. This short course examines calculations of materiality using some key benchmarks and factors, as outlined in ISA 320.

This module will enable you to

  • Spot common issues found during audit file reviews
  • Determine an appropriate level of financial statement materiality
  • Understand the process for calculating performance materiality
  • Evaluate misstatements in terms of materiality
  • Recognise when and how to revise materiality during the audit

About the module

ISA 320 Materiality in Planning and Performing an Audit does not include a definition of materiality, because the principle is a financial reporting concept. Calculating materiality is therefore a matter of judgement for auditors, and it is important to understand how to get it right using some key benchmarks and factors.

This short course examines calculations of financial statement and performance materiality, the relationship between audit risk and materiality and the approach that auditors should take to materiality assessments during an audit.

Contents

  • Materiality
    • Calculating materiality
    • Determining materiality
    • Common problems
    • Performance materiality
    • Evaluating misstatements
    • Changing materiality
    • Revising materiality

How it works

Author

Steve Collings

Steve is Director at Leavitt Walmsley Associates, a firm of Certified Chartered Accountants. He is an internationally recognised speaker, writer and commentator on all matters to do with financial reporting and auditing. Steve is a prolific author, having written over 25 books and currently represents the North West of England on ACCA’s Practice Network Panel.

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