Wiley Practitioner's Guide to GAAS 2015: Covering all SASs, SSAEs, SSARSs, PCAOB Auditing Standards, and Interpretations

PCAOB 11 Consideration of Materiality in Planning and Performing an Audit¹

APPLICABILITY

This section applies to planning of all audits.

OBJECTIVES OF PCAOB STANDARD 11

Public Company Accounting Oversight Board (PCAOB) Auditing Standard 11 sets the objective of applying the concept of materiality appropriately in planning and performing audit procedures.

FUNDAMENTAL REQUIREMENTS

Materiality in the Context of an Audit

The auditor should plan and perform audit procedures to detect misstatements that, individually or in combination with other misstatements, would result in material misstatement of the financial statements. This includes being alert while planning and performing audit procedures for misstatements that could be material due to quantitative or qualitative factors. It is ordinarily not practical to design audit procedures to detect misstatements that are material, based solely on qualitative factors.

For integrated audits, Auditing Standard 5, An Audit of Internal Control over Financial Reporting that is Integrated with an Audit of Financial Statements, states that the auditor should use the same materiality considerations in planning the audit of internal control over financial reporting that would be used in planning the audit of a company's annual financial statements.

Establishing a Materiality Level for the Financial Statements as a Whole

The auditor needs to establish a materiality level for the financial statements being audited that is appropriate for ...