The auditor's preliminary judgement about materiality is the maximum amount by which the auditor believes the financial statements could be misstated and still not affect the economic decisions of users.

Question

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The statement is true. Materiality is a concept used by auditors to determine the significance of a misstatement in the financial statements. The auditor's preliminary judgement about materiality is based on the auditor's professional judgment and is used to determine the scope of the audit procedures. It is the maximum amount by which the auditor believes the financial statements could be misstated and still not affect the economic decisions of users.

The Auditor's Preliminary Judgement About Materiality Is the Maximum Amount