Audit Standards Require the Auditor to Consider Materiality Early in the Audit

question 11

Multiple Choice

Audit standards require the auditor to consider materiality early in the audit. Which statement(s) regarding preliminary materiality is (are) true?
I. Preliminary materiality may change during the engagement.
II. Preliminary materiality is the maximum amount by which the auditor believes the financials could be misstated and still not affect the decisions of reasonable users.

• A) I only
• B) II only
• C) both I and II
• D) neither I nor II

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Definitions:

Freud

Sigmund Freud, an Austrian neurologist known for founding psychoanalysis, a method for treating psychopathology through dialogue.

Structures of Personality

Theoretical frameworks in psychology that describe the different components making up human personality, as shaped by various factors.

Freud

Sigmund Freud, an Austrian neurologist and the founder of psychoanalysis, a method for treating psychopathology through dialogue.

Ego

The Freudian structure of personality that deals with the demands of reality.