CAS 320 (Materiality in Planning and Performing an Audit)defines Materiality

question 66

Multiple Choice

CAS 320 (materiality in planning and performing an audit) defines materiality in terms of three key concepts.The first and second concepts are that a material misstatement should be considered in the context of knowledgeable users and the effect on decision making;and that material is relative to circumstances surrounding the decision and nature of the information.The third concept is

• A)that the auditor should consider users of financial statements as a group.
• B)that the auditor should consider users of financial statements individually.
• C)that the users should be informed and approve of the materiality used by the auditor.
• D)that the auditor should be conservative in setting the materiality level.

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Definitions:

Physical Dependence

A physiological state where the body develops a dependency on a substance, leading to withdrawal symptoms when the substance is not used.

Intellectual Functioning

Refers to the mental capacities related to knowledge, reasoning, problem-solving, and abstract thinking.

Flashbacks

Sudden and intense memories of past experiences, often traumatic, that invade the present consciousness, making the person feel as if they're reliving the past.

Narcotic

A drug affecting mood or behavior and sold for nonmedical purposes, often used to induce sleep or relieve pain.