Which of the following statements is not correct about materiality?
Correct answer: A. At the planning state, the auditor considers materiality at the financial statement level only
- A. At the planning state, the auditor considers materiality at the financial statement level only
- B. Materiality judgments involve both quantitative and qualitative judgments
- C. Auditor's consideration of materiality is influenced by the auditor's perception of the needs of an informed decision maker who will rely on the financial statements
- D. Materiality is a relative concept
Explanation
Materiality is considered both for the financial statements as a whole and for particular account balances, classes of transactions, or disclosures. Therefore, saying that planning considers only the financial-statement level is incorrect.
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Auditing examines accounting records and financial statements to determine whether they present a reliable and fairly stated position. The subject covers audit objectives, internal controls, audit evidence, materiality, vouching, verification, working papers, auditor independence, audit reports, and the distinction between an audit and accounting or investigation.
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