Which of the Following Would Not Be a Reason to Lower

question 89

Multiple Choice

Which of the following would not be a reason to lower the threshold for materiality?

• A) The auditor is concerned with potential violations of debt covenants.
• B) There were proposed adjusting entries to a particular account in prior years.
• C) The consequences of a potential misstatement in an account balance are very high.
• D) The audit team wants to limit the amount of time spent at the client's facilities.

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Definitions:

Behavioral Economists

Experts in a field of economics that integrates insights from psychology to understand how people make economic decisions.

Invisible Hand

A term coined by Adam Smith to describe the self-regulating nature of the marketplace, where individual self-interests unintentionally benefit society.

Fairness

The quality of making judgments that are free from discrimination, dishonesty, or injustice.

Ultimatum Game

A game in economic experiments where one player proposes how to divide a sum of money with another, who can accept or decline the offer, with both getting nothing if declined.