AU-C 320 Materiality in Planning and Performing an Audit
AU-C PRONOUNCEMENT
| Original Pronouncement | Statement on Accounting Standards (SAS) 122. |
DEFINITION OF TERM
Source: AU-C Section 320.09
Performance materiality. The amount or amounts set by the auditor at less than materiality for the financial statements as a whole to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality for the financial statements as a whole. If applicable, performance materiality also refers to the amount or amounts set by the auditor at less than the materiality level or levels for particular classes of transactions, account balances, or disclosures. Performance materiality is to be distinguished from tolerable misstatement.
OBJECTIVE OF AU-C SECTION 320
AU-C Section 320.08 states “that the objective of the auditor is to apply the concept of materiality appropriately in planning and performing the audit.”
The Nature of Audit Risk and Materiality
Audit risk is the risk that the financial statements are materially misstated and the auditor expresses an inappropriate audit ...
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