Materiality in Auditing(Discuss these abstracts in the context of Essay

Materiality in Auditing(Discuss these abstracts in the context of academic research and recent developments in audit regulation and practice) - Essay Example 1647). These definitions point to its relevance today especially in the recent drive for transparency, ethics and responsibility in the auditing process, which will be explored, among other things, in relation to materiality in auditing. Audit pertains to a review of financial data by an independent third-party auditor. The outcome of the process involves his or her financial statements, including his or her opinion regarding the legitimacy of the data reviewed. Materiality becomes relevant in auditing when risk emerges. This risk usually stems from errors or omissions in financial reporting. The impact is based on the degree by which it affects the decision making of those who use the information from the financial statements. For instance, a small error or omission in a periodic procedure could lead to a cumulative risk that could greatly influence the financial information since there is the possibility that it occurs on periodic basis. The importance of materiality can be demonstrated in the process by which it is conducted (see Fig. 1). Ideally, all audit procedures should undergo materiality considerations from the very first stage. According to Bragg (2011), as early as the identification of the nature, timing and extent of the audit procedure, materiality should already be determined. Specifically, it should be undertaken in: 1) the design of audit procedures for mechanisms to detect misstatements; the pursuit of the elimination of audit risk; and, the assessment of the risk of material misstatement as the basis for the audit procedures (Bragg, pp.25). These variables underscore how materiality forms part of the foundation of sound audit procedures, one that is capable of addressing errors and risks. The defined object of audit underscores this as auditors are expected â€Å"to carry out procedures designed to obtain sufficient appropriate audit evidence†¦ [in order]