Your Preliminary Audit Plan for Solar Ltd States That Planning

question 10

Multiple Choice

Your preliminary audit plan for Solar Ltd states that planning materiality is set at one per cent of total assets. This planning materiality amount:

• A) will need to be used for evaluation at the end of the engagement to judge the overall presentation of the financial report, because that was the level used to set the scope of testing.
• B) should not be revised in mid-audit except in unusual circumstances and the audit planning procedures and documentation will need to be redone.
• C) may be revised based on the results of audit tests and new information as the audit progresses.
• D) is appropriate for planning, but the evaluation materiality amount must be based on a percentage of revenue.

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Definitions:

Cognitive Factors

Pertains to the mental processes like perception, memory, and reasoning that influence our behavior and experiences.

Bandura

Albert Bandura, a psychologist known for his work on social learning theory and the concept of self-efficacy.

Negative Contrast

A psychological phenomenon where the response to a second stimulus is influenced negatively by a previously presented stronger stimulus.

Medium Reward

Denotes a reward that offers a moderate level of satisfaction or incentive.