Auditors have difficulty applying the concept of materiality in practice because they often do not know who the users of the financial statements are or what economic decisions will be made.

Question

Quizplus · Accepted Answer

Materiality is a subjective concept that depends on the size and nature of an item's impact on financial statements, and its significance to users' economic decisions. Since auditors may not know all potential users or their specific decision-making needs, applying materiality can be challenging in practice.

Auditors Have Difficulty Applying the Concept of Materiality in Practice