Why do auditors concentrate their efforts on material items in accounts?
Correct answer: C. Because the risk to the accounts of their being incorrectly stated is greater
- A. Because they are easier to audit
- B. Because it reduces the audit time
- C. Because the risk to the accounts of their being incorrectly stated is greater
- D. Because the directors have asked for it
Explanation
Material items can significantly influence users’ decisions, so an error in them creates greater risk of misleading financial statements. Auditors therefore focus their testing on material balances and transactions rather than simply choosing items that are easier to audit.
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About Auditing
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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