[amp_mcq option1=”Materiality is a relative concept” option2=”Materiality judgments involve both quantitative and qualitative judgments” option3=”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” option4=”At the planning state, the auditor considers materiality at the financial statement level only” correct=”option4″]<\/p>\n
The correct answer is D. At the planning state, the auditor considers materiality at the financial statement level only.<\/p>\n
Materiality is a relative concept that depends on the circumstances of the particular engagement. It is the magnitude of misstatement that could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. Materiality judgments involve both quantitative and qualitative judgments. 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.<\/p>\n
At the planning stage, the auditor considers materiality at the financial statement level and at the account balance and disclosure level. The auditor’s consideration of materiality at the financial statement level is based on the auditor’s understanding of the entity and its environment, including its business model, its industry, and the regulatory environment in which it operates. The auditor’s consideration of materiality at the account balance and disclosure level is based on the auditor’s understanding of the entity’s financial reporting system and the nature of the entity’s transactions.<\/p>\n","protected":false},"excerpt":{"rendered":"
[amp_mcq option1=”Materiality is a relative concept” option2=”Materiality judgments involve both quantitative and qualitative judgments” option3=”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” option4=”At the planning state, the auditor considers materiality at the financial statement level only” correct=”option4″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[698],"tags":[],"class_list":["post-32655","post","type-post","status-publish","format-standard","hentry","category-auditing","no-featured-image-padding"],"yoast_head":"\n