During the planning phase of the audit, auditors estimate the monetary amounts that are large enough to make a difference in decision making.This amount is referred to as:
A)Risk
B)Materiality
C)Substantive
D)Sampling

Question

Quizplus · Accepted Answer

Materiality refers to the monetary amount that could potentially affect decision making. During the planning phase of an audit, auditors establish a materiality threshold, which is used to determine the scope of the audit procedures that will be performed. This threshold is based on factors such as the size and nature of the organization, the industry in which it operates, and the potential impact of any misstatements on financial statement users.

During the Planning Phase of the Audit, Auditors Estimate the Monetary