Which of the Following Is Not a Qualitative Factor That

question 5

Multiple Choice

Which of the following is not a qualitative factor that may affect an auditor's establishment of materiality?

• A)Potential for fraud.
• B)The entity is close to violating loan covenants.
• C)Firm policy sets materiality at 5 per cent of pre-tax income.
• D)A small misstatement that would interrupt an earnings trend.

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Definitions:

Siblings

Siblings are brothers or sisters, including those related by blood, adoption, or marriage, often sharing common parents or familial backgrounds.

Conduct Problems

Behavioral issues in children and adolescents characterized by rule-breaking, aggression, deceitfulness, and defiance of authority.

Consensus

General agreement among a group of people.

Status Offense

A type of legal offense that is considered a violation only because of the age of the offender, such as truancy or underage drinking.