Materiality and risk are ________ concepts in planning the audit and designing an audit approach.
A) reasonable
B) typical
C) optional
D) fundamental

Question

Quizplus · Accepted Answer

Materiality and risk are fundamental concepts in planning the audit and designing an audit approach. They are crucial in assessing the nature, timing, and extent of audit procedures required to obtain sufficient audit evidence. Materiality refers to the significance of an item or transaction in a financial statement, while risk pertains to the possibility of material misstatement due to inherent or control factors. These concepts help auditors prioritize their efforts, allocate resources, and make informed judgments about the audit findings. Failure to consider materiality and risk may result in inadequate audit procedures, misinterpretation of information, and incomplete or inaccurate audit reports.

Materiality and Risk Are ________ Concepts in Planning the Audit