MATERIALITY IN ACCOUNTING AND AUDITING

The principles of accounting, also referred to as concepts or assumptions, constitute the rules for keeping accounting books and preparing financial statements in order to ensure the reliability and usefulness of information provided by accounting. Materiality as one of these principles contributes towards this goal. Accounting as an information system is founded on these principles, conventions and practices, which originate in the attempts to satisfy the information needs of users of financial statements in terms of the actual financial and economic situation of an economic entity (Kumor, 2014, p.410). The article discusses the principle of materiality, its nature and importance in accounting and auditing. It aims to present the importance of the principle of materiality in accounting and auditing. Based on the analysis of literature and legal acts, the article arguess that the application of the principle of materiality in accounting allows for simplifications while maintaining a true and fair picture under the accepted accounting principles (policy) without detriment to the usefulness of information presented in the financial statements. Materiality in financial audit determines financial and non-financial misstatements. The level of materiality, in turn, enables the auditor to define the scope of financial audit procedures and constitutes an important reference for the assessment of the effect of the misstatements in the financial statements revealed by the auditor and their impact on the reliability of financial statements. The verification of these hypothesis was conducted with the use of such research tools as the analysis of literature and legal acts.