Income before taxes is often used by the auditor as a benchmark for materiality. Once income before taxes is established as a benchmark for materiality for a particular audit client, the auditor still must decide whether any misstatements could affect other benchmarks such a current assets or current liabilities, for example.

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This statement is true. While income before taxes is often used as a benchmark for materiality, the auditor must still consider whether misstatements in other areas could also be significant for the overall financial statements. This includes items such as current assets and current liabilities.

Income Before Taxes Is Often Used by the Auditor as a Benchmark