In making judgments about materiality at the account balance level, the auditor must consider the relationship between it and financial statement materiality. This should lead the auditor to plan the audit to detect misstatements that:
A) are individually material to the statements taken as a whole.
B) are individually immaterial to the statements taken as a whole.
C) may be immaterial individually, but may aggregate with misstatements in other accounts to a material level.
D) bring the cumulative total of known misstatements to the level of materiality established by management.
E) are individually material to the account balance.

Question

Quizplus · Accepted Answer

Misstatements that may be immaterial individually but could aggregate to a material level across different accounts need to be considered by the auditor. This approach ensures that the cumulative effect of multiple small errors does not materially misstate the financial statements as a whole.

In Making Judgments About Materiality at the Account Balance Level