ISA 320: Materiality in planning and performing an audit

The objective of the auditor is to apply the concept of materiality appropriately

in planning and performing the audit.

ISA 320 outlines the auditor’s responsibility in relation to the concept of materiality. It also interrelates with the provisions laid down in ISA 450 ‘Evaluation of Misstatements Identified During the Audit’ to which auditors must also refer as this provides guidance on how materiality is applied in evaluating the effect of identified misstatements on the audit and of uncorrected misstatements.

Audit materiality is wholly judgmental and judgements concerning materiality are made in relation to the specific circumstances surrounding the entity. In addition, judgements are also made having regard to the size, complexity and objectives of the entity.

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