Which of the following is a correct statement?
A) There is no relationship between materiality and risk in auditing.
B) Risk is a measure of magnitude or size.
C) The combination of performance materiality and the audit risk model factors determines planned audit evidence.
D) Performance materiality is part of the audit risk model.

Question

Quizplus · Accepted Answer

Performance materiality and the audit risk model factors (inherent risk, control risk, and detection risk) are used to determine the planned audit evidence. The combination of these factors helps the auditor to assess the overall risk of material misstatement and to plan the audit accordingly. Materiality is a concept that is used to determine the significance of an item or amount in the financial statements, and it is also considered in the auditing process, but it is not directly related to risk. Risk is a measure of the likelihood and potential impact of an event, and it can be influenced by many factors, including size, complexity, uncertainty, and susceptibility to error.

Which of the Following Is a Correct Statement