The threshold of materiality may be lowered in the case of potential fraud in the financial statements under audit.Why is this different from the usual materiality levels set by auditors?
A)The intentional act of committing fraud itself becomes material,regardless of dollar amounts.
B)Fraud is not relative to internal control,which requires larger materiality limits.
C)The act of fraud is a characteristic of certain types of managers,therefore,materiality is irrelevant.
D)Normal audit procedures are designed to catch all fraud,even the smallest of infractions.

Question

Quizplus · Accepted Answer

The intentional act of committing fraud itself becomes material, regardless of dollar amounts. This is because fraud can have a significant impact on the financial statements and the decision-making of users. Therefore, the threshold for materiality may be lowered in the case of potential fraud to ensure that even small amounts of fraudulent activity are identified and reported.

The Threshold of Materiality May Be Lowered in the Case