Which one of the following statements is correct concerning the concept of materiality?
A)Materiality is determined by reference to guidelines established by the Australian Securities and Investments Commission (ASIC).
B)Materiality depends only on the dollar amount of an item relative to other items in the financial report.
C)Materiality depends on the nature of an item rather than on the dollar amount.
D)Materiality is a matter of professional judgment.

Question

Quizplus · Accepted Answer

Materiality is a matter of professional judgment, which is based on both quantitative (dollar amount) and qualitative (nature or context of the item) factors. While ASIC may provide guidance on materiality, it is ultimately up to the professional judgment of the auditor to determine what is material.

Which One of the Following Statements Is Correct Concerning the Concept