Explain why materiality is important but difficult to apply in practice.
a. materiality is important because it sets a standard baseline for financial statements that auditors must adhere to before the audit opinion can be made. it is difficult to apply because the cost versus the benefit of the standard baseline can be extremely difficult to achieve under larger companies.
b. materiality is important because it requires the auditor to exercise considerable professional judgment when applying the application to ensure financial gains. it is difficult to apply because the auditor's judgment is limited to the professional auditing standards guidelines.
c. materiality is important because if financial statements are materially misstated, users' decisions may be affected, and thereby cause financial loss to them. it is difficult to apply because there are often many different users of the financial statements.
d. materiality is important because it ensures third parties that every financial statement they review are not misstated. it is difficult to apply because there are often multiple auditors and they set materiality to different amounts depending upon what section of the financial statement they are auditing.