Materiality

Materiality is an amount that makes a difference to the users- an audit never provides 100% assurance- only “reasonable assurance." For instance, if a company has overstated its revenues by $5million when its total revenues are $4 billion, then this $5 million is considered 'immaterial.' However, if the company's total revenues are only $50 million, then this $5 million overstatement is considered 'Material."

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