Materiality

Risk assessment procedures are performed to identify and assess the risks of material misstatemen, whether due to ____________ ?

• Fraud
• Error
• Both A & B
• Management

Materiality is determined when establishing the overall audit strategy ?

• True
• False

Process of identifying and assesing the risk of material mistatement involves which step(s) ?

• Understand entity and its environment
• Understand entity’s internal control
• Other Quantitative and qualitative considerations
• All of above

While obtaining an understanding of the entity and its environment, including internal control, risk factors may be identified. Such risk factors, are _________?

• Internal
• External
• None
• Both A and B

Quality control reviewer is part of the engagement team ?

• False
• True

Consideration of materiality is done at which stage(s)?

• Planning and performing the audit
• Evaluating the effect of identified misstatements on the audit
• Forming an opinion on the financial statements
• All of above

Higher probability of uncorrected and undetected misstatements, lower performance materiality !

• False
• True

Which type of materiality may be considered for a particular class of transactions, account balance or disclosure ?

• Overall Materiality
• Performance Materiality
• Trivial Materiality
• Both A and B

When information comes to light that would have caused a different materiality amount to have been initially determined, what should the auditor do ?

• Revise only overall materiality
• Revise performance materiality based on overall, if needed
• Perform further audit procedures
• Both B &C

The measurement percentage of materiality will often decrease as the size and complexity of the entity increases ?

• True
• False