Performance materiality helps the auditor to determine which of the following?
A) Extent of audit evidence needed.
B) The specific analytical procedures to perform.
C) The specific substantive procedures to perform.
D) Control risk assessment.

Question

Quizplus · Accepted Answer

Performance materiality is a term used in auditing that refers to the amount or level of misstatement in the financial statements that is considered significant enough to affect the users' decision-making. By setting the performance materiality level, the auditor can determine the appropriate extent of audit evidence needed to achieve a reasonable assurance level. Therefore, the correct choice is A, extent of audit evidence needed. B and C are incorrect because they refer to specific procedures that are determined based on the audit objectives, not performance materiality. D is incorrect because control risk assessment is determined based on the auditor's understanding of the client's internal control system, not materiality.

Performance Materiality Helps the Auditor to Determine Which of the Following