Which of the following is NOT a qualitative factor when assessing materiality?
A) A misstatement that changes a loss into income or vice versa
B) The existence of statutory or regulator reporting requirements that affect materiality thresholds
C) The potential effect of the misstatement on trends, especially trends in profitability
D) The use of simplistic numerical thresholds and rules of thumb

Question

Quizplus · Accepted Answer

Qualitative factors when assessing materiality relate to the nature of the misstatement and its context rather than to the size of the misstatement. Choices A, B, and C all describe qualitative considerations that affect how materiality is judged based on the nature and context of the misstatement. Choice D, however, refers to quantitative approaches, which rely on numerical thresholds and rules of thumb, and does not represent a qualitative factor.

Which of the Following Is NOT a Qualitative Factor When