Materiality
Materiality in auditing is like deciding whether a small scratch on your car needs fixing. If it’s barely noticeable, you might leave it alone. But if it’s a big dent, you can’t ignore it. Similarly, materiality helps auditors decide if an error in the financial statements is significant enough to matter or if it’s something minor that won’t affect how people see the company’s financial health.
Without materiality, auditors would be treating every little issue like a major disaster, which would turn the audit process into an endless ordeal. Instead, they focus on the bigger problems that could impact decisions, making the audit more efficient and keeping things from getting bogged down in unnecessary details.
By CA L.Muralidharan and CPA L.Mukundan
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