In 1965, the Canadian Institute of Chartered Accountants (CICA) first published Materiality in Auditing: An Audit Technique Study. The Foreword to that study notes that: “One of the basic problems in conducting an audit is determining the extent of the examination. While the auditor must ensure that his examination has been in sufficient breadth and depth to warrant the expression of opinion on his client’s financial statements, he must plan his audit program wisely so that the cost of the service to the client is not excessive. Materiality plays an extremely important part in reconciling these two objectives."
"Although materiality has almost become a by-word in the profession, very little has been published to assist the auditor in applying the underlying concept to a particular situation. The Study Group, therefore, felt that this topic should be dealt with first, before proceeding to other topics of interest. The study should be of immediate interest to the members of the profession in public practice and should be a useful reference as future studies are published.”
“The reader should realize that this study discusses the concept of materiality primarily in relation to its effect on auditing procedures. The discussion has necessarily included some reference to the accounting consequences of materiality. But, the complex subject of accounting materiality as a whole - for instance as applied to consistency, classification or disclosure on financial statements - has not been dealt with.
“The members of the Study Group recognized at the outset that the application of the materiality concept rests on judgment - mature judgment based on experience. The consensus of the experience of the group has resulted in a series of guidelines which should be of help to the auditor. These guidelines are offered, not as substitutes for professional judgment but rather as stimulants to the reader by bringing to his attention the factors he should take into account in formulating his judgment.”
