Materiality in an audit

Materiality concerns misstatements, including omissions, that could reasonably influence decisions of users taken on the basis of the financial statements. The auditor sets planning materiality using professional judgement and revises it when appropriate. Both size and nature matter, and materiality is applied in planning, performing work and evaluating identified misstatements. Judgement takes account of the needs of users as a group, the reporting framework and the nature and circumstances of the entity. The auditor reassesses materiality if information obtained during the audit changes the initial basis for the decision.