Which of the following would an auditor most likely use in determining the auditor's overall materiality?
A)The anticipated sample size for planned substantive procedures.
B)The entity's annualized interim (i.e., quarterly)financial statements.
C)The results of the internal control questionnaire.
D)The contents of the management representation letter.

Question

Quizplus · Accepted Answer

Materiality is often determined as a percentage of a financial statement amount or the entity's net income. An auditor would most likely use the entity's annualized interim financial statements to determine the overall materiality because they provide an estimate of the full-year financial statements, which would be the basis for the auditor's opinion. The anticipated sample size for planned substantive procedures, results of the internal control questionnaire, and contents of the management representation letter would not be as relevant to determining overall materiality.

Which of the Following Would an Auditor Most Likely Use