Running Head: ACCOUNTING1AccountingStudents NameUniversity
NameCourse NameDateACCOUNTING2Material in AccountingMaterial in
accounting refers to information that might be significant to the
operationsof a firm. Information in accounting is material if
misstating, obscuring or omitting could havean impact on the
decisions made by the primary users of the financial statements
(Gordeeva,2011). Accountants and auditors determine whether an item
is material by considering thenature of the item. The materiality
of an item depends on the monetary amount as well as itsnature. The
monetary amount of the item is considered in relation to other
items in the financialstatements.The materiality of an item affects
the acceptable and inherent risk borne by an auditedcompany by
increasing or decreasing it. The two relate in that the higher the
materiality, thehigher the acceptable and inherent risk borne by an
audited company. Therefore, an item with ahigher materiality
contributes mare to the acceptable and inherent risk borne by an
auditedcompany. Materiality, the acceptable and inherent risk
affect the general auditing standardsapplication especially the
fieldwork and reporting that are in the standard reports of the
auditor.Caterpillar Is Accused in Report to Federal Investigators
of Tax FraudJesse Drucker in the article: Caterpillar Is Accused in
Report to Federal Investigators ofTax Fraud focusses on an
accounting fraud by Caterpillar. …