Materiality are of 3 types:
Overall Materiality (OM)- The level which represents the significant level in the company’s financial statements, which can influence the decision making of the users of the
company’s financial statement as a whole.
Performance Materiality(PM) – The amount set by us as auditor at less than the Overall Materiality, so that the aggregate of undetected misstatements does not exceed Overall Materiality. PM is the buffer which the auditor creates at the certain %age of the OM so that the the aggregate level misstatement does not exceed the OM.
Specific Materiality – The misstatements or events that are used by the auditor to identify misstatements at lesser than the Overall Materiality. Specific Materiality could relate to sensitive areas such as particular note disclosures (that is, management remuneration or industry-specific data), compliance with legislation or certain terms in a contract.
