Question

1. Explain and give an example of the term “materiality” (5pts)

2. Explain and give an example of the term “fiduciary” (5pts)

Answer 1

1. Materiality will mean relative size of an amount and relatively large amount are always material in nature whereas relatively smaller amount are immaterial in nature.

Materiality will always be based upon the professional judgement and when we are providing an example of it then a large organisation which has a net income of 10 billion dollars will not provide much importance to an expense of $1000 where as an organisation with net income of $10,000 will always be providing and importance of $1000 because there is the relative sizing of these expenses and income that will make them material or a material so materiality is always a subject of professional judgement.

2. Fudiciary is trustworthy position like when we will be providing the the example of fudiciary, then we are providing the banks with the fudiciary position, when we are depositing our money into the back of the bank will be taking care of the money and it will be done in most trusted manner because the bank is the fudiciary of the individual deposits so fudiciary is representing the trustworthy positions.

the management and share holders are also having some kind of fudiciary relationships where as other professional relationships are also having a fiduciary element in it because they are based upon the trust like when crime is committed by an individual and he has told the details specifically to the lawyer then he should not be detailing it to the court room but he will be trying to protect the the client.