PCAOB standards suggest which of the following when interpreting the federal securities laws relating to materiality?
A)A material amount would significantly alter the "total mix" of information made available to an investor.
B)Materiality cannot be used as a basis for interpreting federal securities laws.
C)A material amount is that at which an individual's decision would be changed.
D)Materiality is composed of quantitative and not qualitative aspects.

Question

Quizplus · Accepted Answer

PCAOB standards suggest that materiality should be interpreted as the point where a "total mix" of information available to an investor would be significantly altered. This aligns with the legal definition of materiality as set forth in court cases such as TSC Industries, Inc. v. Northway, Inc. (1976). Choice B is incorrect as materiality is a key concept in interpreting federal securities laws. Choice C is also incorrect as materiality is not defined solely by an individual's decision, but by whether the information would influence a reasonable investor's decision. Choice D is incorrect as materiality considers both quantitative and qualitative aspects.

PCAOB Standards Suggest Which of the Following When Interpreting the Federal