When CPAs do audits for specified elements, accounts, or items,
A) materiality is defined in terms of the overall financial statements.
B) materiality is defined in terms of the elements, accounts, or items being audited.
C) auditors do not need to extend their audit efforts to include other elements, accounts, or items that are interrelated with those being audited.
D) the authority for auditing specified elements, accounts, or items is in the review and compilation standards.

Question

Quizplus · Accepted Answer

Materiality for specific elements, accounts, or items is defined in terms of those items being audited, not in terms of the overall financial statements. The auditors must focus their audit efforts on those specified items but should still consider any interrelated items. The authority for auditing specified elements is in the generally accepted auditing standards, not the review and compilation standards.

When CPAs Do Audits for Specified Elements, Accounts, or Items