What is Materiality, How to decide Materiality , who decide what will be the level of Materiality ?

Question

Accepted Answer

Materiality is the concept of determining the significance or importance of information in financial reporting.

Materiality refers to the threshold at which information becomes relevant to users of financial statements.
It is a subjective judgment based on the nature and size of the item or error being evaluated.
Materiality is determined by considering both quantitative and qualitative factors.
Quantitative factors include the monetary amount, while qualitative factors include the nature of the item, its impact on users, and the context of the financial statements.
Materiality is decided by management, auditors, and regulatory bodies.
Management determines materiality for financial reporting purposes, considering the needs of users and the overall financial statement presentation.
Auditors assess materiality to plan their audit procedures and evaluate the impact of misstatements on the financial statements.
Regulatory bodies may provide guidelines or standards on materiality for specific industries or jurisdictions.
Examples of materiality decisions include determining the significance of a misstatement in revenue recognition, the valuation of assets, or the disclosure of contingent liabilities.

Accepted Answer

Year of experience and Hr will decide

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