Auditing Special Purpose Frameworks: Materiality Levels

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Calculating financial statement materiality levels under the auditing standards is framework neutral. The concepts are the same for all financial reporting frameworks.

The preliminary estimate of materiality at the financial statement level, often called planning materiality, is the maximum amount by which the auditors believe the statements could be misstated, by known or unknown error or fraud, and still not affect the decisions of reasonable financial statement users. Clarified Auditing Standards require quantification of materiality levels, which are estimates to guide auditors' decision-making and design of auditing procedures. This estimate is only a guide and is not a specific determination of what is, and is not, material in an audit.

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About Larry Perry

Larry Perry

Larry Perry, CPA, is managing member of CPA Firm Support Services LLC.


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