Auditor’s report under the Companies Ordinance, 1984 states: “We plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of any material misstatements.” Explain how would you determine whether an item is material? Materiality refers to relative significance of a particular matter in the context of financial statements as a whole. A…

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Materiality consideration is an integral part of auditing process as it helps in guiding the evidence to be obtained in order to decide whether financial statements give a true and fair view. The auditor does not guarantee accuracy of financial statements. He provides reasonable assurance that financial statements are free from material misstatement. For example, the entity reported a…

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