The preliminary judgement about materiality is the amount by which the auditor believes the statements could be misstated and still not affect the economic decisions of users.

Question

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The preliminary judgement about materiality sets the maximum amount by which the financial statements could be misstated without affecting the economic decisions of users. This is because if the misstatement exceeds this amount, it could potentially change users' decisions regarding the company. Therefore, the auditor sets the highest amount that can be considered immaterial.

The Preliminary Judgement About Materiality Is the Amount by Which