The amount(s) set by the auditor at less than the materiality for the financial statements as a whole to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality for the financial statements as a whole is referred to as
A) the materiality range.
B) the error range.
C) tolerable materiality.
D) performance materiality.

Question

Quizplus · Accepted Answer

The amount(s) set by the auditor at less than the materiality for the financial statements as a whole to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality for the financial statements as a whole is called performance materiality. Therefore, option D is the correct answer. Option A, B, and C are incorrect because they do not accurately describe the term. The materiality range is not a specific term, the error range is not a term used in auditing, and tolerable materiality is the maximum amount of misstatement that the auditor is willing to accept in a particular account balance or transaction class without qualifying the opinion.

The Amount(s) Set by the Auditor at Less Than the Materiality