In accounting, misstatement may come in varying degrees, including mainly material misstatement and immaterial misstatement. Immaterial misstatement arises from the financial statements presented by a reporting entity that, though not completely in conformity with applicable standards or framework, the existence of which does not impact an average user’s decision making (in an adverse manner).

With respect to materiality, relativity rules the day. What is material for one entity may be immaterial for another, and so on. The dividing line between materiality and immateriality cannot be drawn on definitive guidelines due to the different size, sector, complexity, and type of entity.