© 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart
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Because errors will occur anywhere, auditors focus on those that have a significant impact on management’s interpretation of the audit findings.
Materiality dictates what is and is not important in a given set of circumstances—primarily a matter of judgment.
It is generally more important to external audits, when the overall emphasis is on the fairness of financial statement presentations, than to internal audits, where the focus is on determining adherence to management’s policies.