Why Do Auditors Establish a Preliminary Judgment About Materiality

question 73

Multiple Choice

Why do auditors establish a preliminary judgment about materiality?

• A) To determine the appropriate level of staff to assign to the audit.
• B) So that the client can know what records to make available to the auditor.
• C) To plan the appropriate audit evidence to accumulate and develop an overall audit strategy.
• D) To finalize the control risk assessment.

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Definitions:

Incentive Schemes Systems

Programs designed to motivate and reward employees for meeting or exceeding performance and productivity targets.

Goal Congruence

The alignment of the objectives of individuals or groups with the broader goals of the organization to ensure everyone works towards the same targets.

Value-based Management

A management approach that focuses on creating maximum value for shareholders and customers by basing decisions on their potential to increase value.

Economic Value

The value that an asset or service provides to its user, often measured in terms of its ability to generate income or save costs.