Methodology for Determining Materiality in Audit and Applying it when Assessing Detected Misstatements
Methodology for Determining Materiality in Audit and Applying it when Assessing Detected Misstatements

Summary/Abstract: The goal of this study is to develop theoretical and methodological provisions, as well as practical recommendations for determining and applying the materiality level at all stages of audit, which ensures the efficiency of audit planning and minimizing the risk of revising the audit strategy at the final stage. The article substantiates the methodology on general determining of materiality levels for financial reporting for its essential items, performing audit procedures and the amountbelow which misstatements would be clearly trivial. The research novelty of the study is the rational mechanism developed by the authors to determine and substantiate the materiality levels in the audit. The methodology is focused on full and transparent documenting of determining and applying materiality at all stages of the audit. The authors’ multilevel mechanism for determining the materiality is also a key criterion for the audit quality, because it ensures the compliance of the opinion from the auditor’s report with the detected audit evidence.

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