Anne Aylor. Inc Essay

Different users for distinguishable purposes to use financial information. Not each parts of the financial statements are equally relevant to all users. For instance, stockholders are more concerned with derive growth and revenue than creditors. Materiality is a relative rather than an absolute concept. Based on different operation environment, the materiality threshold impart vary to influence users of the financial statement. For example, the magnitude of a misstatement that will influence users of the financial statement will change based on how the entity is performing in the industry. approximately misstatements affect both a balance sheet an income statement account due to the dual entering method. So, auditors must design a audit plan to detect the smallest misstatement that will influence users of the financial statement.A risk of management fraud will affect directly the accounting amount, such as top income. For example, asset accounts will be overstated and liabili ty accounts will be understated. The objective of setting allowable misstatement is to provide reasonable assurance that the financial statements are fairly presented in all material respect at the lowest cost. So, auditors may design a higher tolerable misstatement tominimize cost for the slight evidence that will be needed. Conversely, the lower the tolerable misstatement the more evidence that will be needed.We cannot impart every account that will be misstated by an amount equal to its tolerable misstatement. In the fact, it is more likely that most accounts will be misstated by an amount greater then its tolerable misstatement patch others may be misstated by an amount less than its tolerable misstatement. Planning for an audit helps the auditor fast and effectively perform the audit before starting an audit. Auditors are required to design an audit platform because auditors must consider the risk of material misstatement. Thus, Auditors should have trial balance amounts to establish materiality thresholds for the catamenia year audit.