Planning materiality helps the auditor determine the extent of audit evidence needed in order to provide an opinion on the financial statements.

Question

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Planning materiality is a benchmark used by auditors to determine the amount of audit evidence needed to form an opinion on the financial statements. It is determined based on the auditor's professional judgment and takes into consideration the size of the company, its industry, and the risk of material misstatement. By setting a planning materiality level, the auditor can determine the overall scope of the audit and focus on areas where the risk of material misstatement is higher.

Planning Materiality Helps the Auditor Determine the Extent of Audit