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Accounting & Tax vocabulary · Auditing & Internal Control

Materiality

Meaning in accounting & tax, with examples

/məˌtɪriˈæləti/nounAdvanced term

In accounting & tax, materiality means: The idea that an error or omission matters if it is large or important enough to change the decisions of people who read the financial statements.

In Turkish: önemlilik

How it is used

Auditors set a materiality level, often as a percentage of profit, revenue or assets, and focus their work on material items. The adjective is material: a material misstatement, a material weakness.

Example sentences

  1. Overall materiality for this audit was set at 5 percent of profit before tax.

  2. The error is well below materiality, so it won't be adjusted.

Common collocations

  • materiality level
  • overall materiality
  • performance materiality
  • material misstatement
  • misstatementA difference between an amount shown in the financial statements and the amount that should be shown, caused by error or fraud.
  • auditAn independent examination of a company's financial statements and records to check that they are accurate and follow the applicable rules.
  • audit opinionThe auditor's formal conclusion, given in the audit report, on whether the financial statements are fairly presented in all material respects.
  • auditorA qualified professional who examines a company's accounts and records and gives an independent view on whether they are reliable.

This word in other fields

The same English word can have a different meaning in another field:

More terms: Auditing & Internal Control

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This page explains English vocabulary for learners. It is not financial advice.