The Auditors Must Consider Materiality in Planning an Audit Engagement

question 19

Multiple Choice

The auditors must consider materiality in planning an audit engagement.Materiality for planning purposes is:

• A)The auditors' preliminary estimate of the largest amount of misstatement that would be material to any one of the client's financial statements.
• B)The auditors' preliminary estimate of the smallest amount of misstatement that would be material to any one of the client's financial statements.
• C)The auditors' preliminary estimate of the amount of misstatement that would be material to the client's balance sheet.
• D)An amount that cannot be quantitatively stated since it depends on the nature of the item.

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Definitions:

High-Strung Temperament

Refers to individuals who are often tense, anxious, and may be overly sensitive or reactive to stimuli or stress.

Fear Circuits

Neural pathways in the brain involved in the detection and response to perceived threats, playing a critical role in fear responses.

Amygdala

A part of the brain's limbic system involved in emotion regulation, particularly fear and pleasure responses.

Major Depressive Disorder

A mental disorder characterized by pervasive and persistent low mood accompanied by low self-esteem and loss of interest or pleasure in normally enjoyable activities.