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Qualitative Factors Can Affect an Auditor's Assessment of Materiality

question 134

Multiple Choice

Qualitative factors can affect an auditor's assessment of materiality.Which of the following statements is True?
I. Misstatements that are otherwise immaterial may be material if they affect earnings trends.
II. Misstatements that are otherwise minor may be material if there are possible consequences arising from contractual obligations.


Definitions:

Social Regulation

Rules and standards imposed by governments to protect public health, safety, and welfare, including environmental and workplace regulations.

Critics

Individuals or groups who express judgments or evaluations, often negative, about various subjects, including art, literature, policies, or societal norms.

Government

An organized group or system responsible for governing a structured community, typically a country.

Efficiency Loss

The decrease in economic efficiency that occurs when a market outcome does not allocate resources in the most economically beneficial way, often due to externalities or market failures.

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