Respond to the following in a minimum of 175 words
Material in the context of accounting as it relates to auditing refers to the discovery of significant errors or risks in an organizationâ€™s financial statements. The amount in quantity and nature of quality of misstatements are both relevant and impactful in an auditorâ€™s job of deciding what is material. The discovery of the material findings by the auditor auditing is the one who determines whether an item is material in nature as it pertains to the presented financial figures of the organization.
Material findings that pose significant outcomes for instance could involve questionable application to Generally Accepted Accounting Principles, and limitations in the scope of an audit. As auditors make their qualified audit opinion with the material findings, a secondary audit may result to ensure that corrections are made to their accounting policy.
The material significance of an audit report can leave a permanent mark on an organization financial records for future business dealings. I think it serves as a report card that can alter how potential investors and lenders look at the organization as viable business partners.
In an audit, the word material refers to materiality. There is a line that no one can specifically put a threshold to, but it exists. The problem with pin pointing this line is that something material for one business could be immaterial for another. This makes it so auditing firms cannot create simple guidelines on this. 1000 dollar may not be a big deal if misstated for a huge entity, but 10,000 misstated most definitely could be a big deal. This type of omission could mislead lenders, investors, or the members of an entity in a way in which they make a financial move. larger risks in financial auditing needs to be taken into account as well as materiality because these things will determine how auditors apply the generally accepted auditing standards. A first time client for an auditing firm may be the hardest the first year, there are many things to be done to familiarize with the business, and to assess the risk, and to finally conclude their opinion and present a fair presentation of none materiality misstated financials.