Which of the Following Statements Is Not Correct About Materiality

question 51

Multiple Choice

Which of the following statements is not correct about materiality? 

• A)The concept of materiality recognizes that some matters are important for fair presentation of financial statements in conformity with GAAP, while other matters are not important.
• B)An auditor considers materiality for the aggregate level of misstatements that could be material to any one of the financial statements individually.
• C)Materiality judgments are made in light of surrounding circumstances and necessarily involve both quantitative and qualitative judgments.
• D)An auditor's consideration of materiality is influenced by the auditor's perception of the needs of a reasonable person who will rely on the financial statements.

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Definitions:

Negotiation

The process of discussing and reaching an agreement between two or more parties, each with its own interests and objectives.

Mediation

A confidential and voluntary process involving a neutral third party to help resolve disputes or conflicts.

Wrongful Dismissal

A lawsuit filed in a court by an employee alleging that he or she was dismissed without proper contractual or “reasonable” notice.

Reasonable Notice

The period of notice that an employer is legally required to give an employee before terminating their employment, or that an employee should give an employer before resigning.