Auditors should consider only quantitative effects and not qualitative effects in making materiality judgments.

Question

Quizplus · Accepted Answer

Auditors should consider both quantitative and qualitative factors in making materiality judgments. Quantitative factors include the amount of the financial statement item, while qualitative factors include the nature of the item, the context in which it occurs, and the potential magnitude of the misstatement. Ignoring qualitative factors could lead to a failure to recognize the impact of certain misstatements that could be material in the context of the financial statements as a whole.

Auditors Should Consider Only Quantitative Effects and Not Qualitative Effects