How should auditors use the concept of materiality?
A)As a guide to assessing inherent risk
B)As a guide in assessing control risk.
C)As a guide in deciding to report a deficiency to the audit committee.
D)As a guide in planning the audit program.

Question

Quizplus · Accepted Answer

Materiality should be used as a guide in planning the audit program, as it helps determine the nature, timing, and extent of audit procedures needed to achieve reasonable assurance that financial statements are free of material misstatement. Materiality should also be considered when evaluating the results of those procedures and determining the overall conclusion of the audit. While materiality may indirectly influence assessments of inherent risk and control risk, it is not a specific guide for making those assessments. Materiality may also influence decisions about reporting deficiencies, but should not be the sole determining factor in such decisions.

How Should Auditors Use the Concept of Materiality