Which of the following is a correct statement regarding performance materiality?
A) Determining performance materiality is necessary because auditors accumulate evidence by segments.
B) The level of performance materiality does not affect the amount of evidence needed.
C) Performance materiality cannot vary for different classes of transactions.
D) Performance materiality is required for public companies, but not for private companies.

Question

Quizplus · Accepted Answer

Performance materiality is determined for each segment or account to ensure that the materiality threshold is appropriate at that level, considering inherent and control risks. Therefore, determining performance materiality is necessary because auditors accumulate evidence by segments.

Option B is incorrect because the level of performance materiality does affect the amount of evidence needed. If performance materiality is set lower, more evidence would be required, and vice versa.

Option C is incorrect because performance materiality can vary for different classes of transactions or accounts.

Option D is incorrect because performance materiality is required for both public and private companies.

Which of the Following Is a Correct Statement Regarding Performance