materiality

Relative importance is measuring the cost with the benefit. For example, there are sales worth $200 million and there are other losses worth $200. The company does not classify the other losses and adds the value within the sales value due to relative importance.

- Used in audit planning to understand risks and design procedures.
- Used during testing (controls/substantive) and documentation of audit evidence and conclusions.

- Example: The auditor references **materiality** when designing procedures and documenting conclusions in the audit file.

- Why it matters: Supports high-quality, defensible audit conclusions and helps detect material misstatements and control weaknesses.