When determining materiality,
A) the preliminary judgment about materiality can be increased, but not decreased during the audit.
B) auditing standards provide specific materiality guidelines to practitioners.
C) only one benchmark can be used.
D) the application of guidelines requires considerable professional judgment.

Question

Quizplus · Accepted Answer

Auditing standards do not provide specific materiality guidelines. Instead, auditors must exercise professional judgment in determining materiality, taking into account factors such as the size and nature of the entity, past experience with the entity, and the specific circumstances of the engagement. This means that the application of materiality guidelines requires considerable professional judgment on the part of the auditor. Additionally, the preliminary judgment about materiality may be adjusted during the course of the audit, based on new information or changing circumstances. Overall, materiality is a complex and dynamic concept that requires careful consideration and judgment by the auditor.

When Determining Materiality