Discuss these abstracts in the context of academic research and recent Essay

Discuss these abstracts in the context of academic research and recent developments in audit regulation and practice - Essay Example ted in the financial statements can be termed to be material if its omission or misrepresentation can have an effect on the decision-making process among the users of these records (Ndreca, 2013, pp 350). In simple definition, materiality in financial accounting is the intolerable misstatements that are embedded in the financial statements with the intention of justifying a non-existent transaction (Dodaro, 2013, pp419). In other words, materiality is the intolerable or unacceptable errors which cannot be ignored because they have a greater effect on the financial information represented in the records (Brannan & Gray, 2005, pp26). These errors are huge hence, when neglected; they may lead to big losses of the firm’s resources. This paper explores the concept of materiality in the financial accounting showing the importance of materiality in auditing process, the main development of the concepts of materiality over time. Materiality can be categorized into two; quantitative materiality and qualitative materiality. Quantitative materiality is the actual financial value that a certain misstatement can cause to the organization. On the other hand, qualitative materiality can be just a mere statement that has either misled certain transaction (Brannan & Gray, 2005, pp41). Accountants and management teams in most cases misstate the financial information to conceal particular information not to be known by the shareholders for their own benefits. Sometimes, certain information may qualify to be material without the intention or knowledge of the accountants and the management (Brannan & Gray, 2005, pp26). Therefore, the auditors have the task of exploring all the financial records and scrutinize them to establish, justify and certify that the information represented in them is quite relevant to the true status of the organization (Dodaro, 2013, pp419). Any deviation should be investigated to establish whet her it can amount to the material or can have an effect on