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

question 25

Multiple Choice

Audit standards require the auditor to consider materiality early in the audit. Which statement(s) regarding preliminary materiality are true?
I. Preliminary materiality may change during the engagement.
II. Preliminary materiality is the maximum amount the auditor 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 are true

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Definitions:

Development

The process of growth, progress, or evolution, often aimed at improving capabilities, systems, or structures.

Enabling Conditions

Factors or circumstances that facilitate the achievement of objectives or the implementation of processes.

Real Team

A group of individuals who are deeply committed to a common purpose, goals, and working approach for which they hold themselves mutually accountable.

Clear Conduct Norms

These are well-defined guidelines or standards of behavior expected within a group, organization, or community.