What exactly is material from a Sarbox perspective?

One of the big complaints about AS2 was about the way it defined materiality. It's "more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected" resulted in rigidly conservative approaches by audit firms. One that has been disavowed now. Many were expecting AS5 to weigh on this and provide just a bit more guidance. They got their wish to an extent. The "remote" language is now a "reasonable possibility." But the issue for some is how to define materiality in terms of a percent of pre-tax earnings. That has never been defined, and some find that vexing. So what to do. One might just adopt the long standing convention of assuming that 5 percent is the magic number. This was proposed by the Committee on Capital Markets Regulations. In the absence of specific guidance, it's as good as any other number.  

- here's an article from CFO.com