Problem:
I once had a professor explain to me that financial statements are like processed food. The food manufacturing process allows for so many parts per million of insects, chemicals, bacteria, etc. As long as the contaminants are kept to a low level the food is considered acceptable for consumption. The same goes for financial statements. The regulators allow for so many errors or omissions as long as they fall below a material level. This helps balance the requirements for accountants so that they don't spend too much money on controls that might far outweigh the benefit. However at the same time the financial statement user is given comfort that the financial statements are reasonably acceptable.
What are your thoughts on this statement?