{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

acc562 week 10 discussion 1

acc562 week 10 discussion 1 - This change has significantly...

Info icon This preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
What makes materiality decisions complex and judgmental? Materiality is a term that is hard to quantify, and must be determined for each individual situation. There are no approaches to be provided a clear boundary around materiality but materiality depends on a judgment or what a “reasonable person” would consider material. Generally, materiality decisions are purely based on professional judgment and skepticism. Deciding what is materiality is a challenge to an auditor. However, there many factors contribute making materiality decisions complex and judgmental. First, complexity in the business environment has increased. The business environment is certainly far more complex today than it was in the past. As complexity in the business environment has increased, the level of complexity in financial reporting has also grown. The greater complexity in financial reporting creates challenges in deciding materiality. Second, complexity in the legal/regulatory view of financial statement materiality has increased.
Image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: This change has significantly lowered the threshold at which corrective action in the form of restatement is required. Third, decisions on materiality are made and supported by discussions and decisions made on (a) key organizational values, policies, strategies, targets, and goals, (b) the interests and expectations of stakeholders uncovered in stakeholder relations, and (c) identification of significant risks and opportunities. Determination of materiality should not be divorced from these activities. Finally, an organization's eco-efficiency measurements and related internal performance indicators will also provide an important basis for measurements included in sustainability reports. References http://www.promptpapers.com/free_term_papers.php?term_paper=1544049&title=Materiality-In-Financial-Statements http://www.allbusiness.com/finance-insurance/4497618-1.html http://web.ifac.org/sustainability-framework/ohp-determining-materiality...
View Full Document

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern