-What criteria should accountants consider in determining whether a transaction or an event is material? Solution Materiality: Materiality is a very important concept in accounting and auditing. Transactions or events are those, which could influence the decisions about firm performance, ability and profitability. If the material items are manipulated, financial statements will not show a true picture. These transactions and events must be given a special interest in both accounting auditing. Major frauds of the recent decades are happened based on the manipulation of material items in financial statements only. So, every accountant should give due importance to material items. While auditing, appropriate tests must be conducted to ensure that these items are not misstated in financial statements..