Determine an appropriate materiality level. Explain. Justify. Revi...

The materiality concept recognizes that few matters, either in the aggregate or individually, are required to ensure fair presentation of the financial statements and their compliance to the generally accepted accounting principles. While at the same time there are other matters which are not so important. While performing an audit, the auditor is generally concerned only with those matters which could materially affect the decision making of the users of the financial statements. It is the responsibility of the auditor to plan and perform the audit in a manner that all the material misstatement which is likely to affect the decision making of the individuals are detected and are reported, if the same remains uncorrected.

The consideration of materiality for an auditor is essentially a matter of professional judgment and is highly influenced by the perception of auditor's as regards the needs and the requirements of the users of the financial statements. The needs of users of financial statements are appreciated by the Financial Accounting Standards Board (FASB) in their discussion with regards to materiality in one of the concepts, Concepts No. 2, Qualitative Characteristics of Accounting Information, where materiality has been defined. This discussion appreciates that the materiality judgments considering the surrounding circumstances and these include both qualitative and quantitative considerations.