Materiality:-
The information is material if its omission or misstatement could
influence the economic decisions of users taken on the Basis of the financial
information.
Materiality depends on the size and Nature of the item, judged
in the particular circumstances of its misstatement.
Disclosures:-
Materiality should be considered by the auditor when determining the nature, timing and extent of audit procedures, and evaluating the effects of misstatements.
Performance materiality:-
Performance materiality is an amount less than the level of overall materiality, and is reduced in order to allow for the risk that there may be several smaller errors or omissions that have not been identified by the auditor. These smaller items could be material when aggregated, so the performance materiality level is set to accommodate them. Thus, performance materiality reduces the probability that the aggregate amount of uncorrected and undetected misstatements exceeds the materiality level for the financial statements as a whole.