Which of the following statements about materiality is incorrect?
A) The preliminary assessment of materiality guides audit planning and testing.
B) Materiality is used to guide the validity of information contained in the financial statements.
C) Materiality is a key auditing concept that is assessed during the risk assessment phase of every audit.
D) Information is considered material if it has no impact on the decision-making process of financial statement users.

Question

Quizplus · Accepted Answer

Information is considered material if it could influence the decision-making process of financial statement users. Materiality is a judgmental concept that is used by auditors to determine the significance of a particular item or issue. The other statements are true: materiality is used to guide audit planning and testing, it is a key auditing concept assessed during the risk assessment phase of every audit, and it is used to guide the validity of information contained in the financial statements.

Which of the Following Statements About Materiality Is Incorrect