When auditors allocate the preliminary judgment about materiality to account balances, the materiality allocated to any given account balance is referred to as:
A)the materiality range.
B)the error range.
C)tolerable materiality.
D)performance materiality.

Question

Quizplus · Accepted Answer

Performance materiality is the amount set by auditors at less than the materiality level for the financial statements as a whole to reduce the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality. It is used to allocate materiality to account balances.

When Auditors Allocate the Preliminary Judgment About Materiality to Account