Performance materiality impacts inherent risk and control risk.

Question

Quizplus · Accepted Answer

Performance materiality is a concept used in auditing to determine the amount by which the financial statements can be misstated without affecting the decisions of reasonable users. It does not impact inherent risk and control risk, which are components of audit risk related to the nature of the business and the effectiveness of the internal control system, respectively.

Performance Materiality Impacts Inherent Risk and Control Risk