By setting a lower planning materiality level an auditor:
A)Decreases their sensitivity to a potential misstatement.
B)Decreases the quality and quantity of evidence that needs to be gathered.
C)Can be certain that they will detect all instances of fraud that have occurred.
D)Increases the quality and quantity of evidence that needs to be gathered.

Question

Quizplus · Accepted Answer

By setting a lower planning materiality level, the auditor increases the level of assurance they provide to the financial statements. This means that they will need to gather more and higher quality evidence to ensure that the financial statements are free from material misstatements. A lower planning materiality level does not guarantee that all instances of fraud will be detected, but it does increase the likelihood of detecting material misstatements, including those caused by fraud.

By Setting a Lower Planning Materiality Level an Auditor