The Threshold of Materiality May Be Lowered in the Case

question 42

Multiple Choice

The threshold of materiality may be lowered in the case of potential fraud in the financial statements under audit.Why is this different from the usual materiality levels set by auditors?

• A)The intentional act of committing fraud itself becomes material,regardless of dollar amounts.
• B)Fraud is not relative to internal control,which requires larger materiality limits.
• C)The act of fraud is a characteristic of certain types of managers,therefore,materiality is irrelevant.
• D)Normal audit procedures are designed to catch all fraud,even the smallest of infractions.

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Definitions:

Standard Deviation

A benchmark for the level of variation or the dispersion rate within a cluster of data.

Free Throw Percentage

The ratio of free throws made to the total number of free throws attempted, often used in basketball statistics.

Steals

Steals can refer to the act of taking something without permission or legal right, typically in a secretive manner.

Standard Deviation

Measures the extent of variance in a dataset relative to its mean, indicating how numbers are spread out.