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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.


Definitions:

MRP II System

Manufacturing Resource Planning, an integrated method for effective planning of all resources of a manufacturing company.

Closed-Loop MRP

A materials requirement planning system that incorporates feedback to continuously update and improve the planning process based on actual performance.

Bill of Material

A comprehensive list that outlines all the raw materials, components, and assemblies needed to manufacture a product.

Product A

A generic term used to reference a specific item or entity produced by a business or organization.

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