Course Hero Logo

Concerning accounting principles and auditing

Course Hero uses AI to attempt to automatically extract content from documents to surface to you and others so you can study better, e.g., in search results, to enrich docs, and more. This preview shows page 148 - 150 out of 519 pages.

concerning accounting principles and auditing procedures, andfacts bearing on the integrity of the entity’s management.42. The auditor is required to determine three differentlevels of materiality: (1) materiality for the financialstatements as a whole, (2) performance materiality, and (3)A. Overall materialityB. Planning materialityC. General materialityD. Specific materialityThe auditor is required to determine three different levels ofmateriality. These are1. Materiality for the financial statements as a whole( also called overall materiality, general materiality,or tolerable misstatement)2.Performance materiality (also called planning materialityor scoping materiality)3.Materiality applied to specific classes of transaction,account balances or disclosures (also called specificmateriality or individual materiality)
43. What materiality level would be considered by the auditorto determine whether the proposed adjustments are significantor not?A. Overall materialityB. Scoping materialityC. Specific materialityD. Performance materialityAASC Bulletin, Series 001 of 2010 states, “Materiality for thefinancial statements as a whole (herein referred to as the“overall materiality”) is the materiality determined at theoverall financial statement level. This materiality levelhelps the auditor determine whether the proposed auditadjustments are significant or not,. I the audit adjustmentsexceed this level, the auditor may need to adjust thefinancial statements.”44. What materiality level is used by the auditor indetermining which line items in the financial statements areto be tested?A. Overall materialityB. Performance materialityC. Specific materialityD. Individual materialityPerformance materiality, calculated as a certain percentage ofoverall materiality, is used in scoping of financial statementline items to be tested by the auditor. This will ensure thatsignificant accounts in the financial statements are coveredby audit testing.45. _____________________is the amount set by the auditor forparticular classes of transactions, account balances ordisclosures for which misstatements, well though lower thanoverall materiality could reasonably be expected to influencebe expected to influence the economic decisions of users ofthe financial statements.A. Performance materialityB. Planning materialityC. Specific materialityD. General materiality

Upload your study docs or become a

Course Hero member to access this document

Upload your study docs or become a

Course Hero member to access this document

End of preview. Want to read all 519 pages?

Upload your study docs or become a

Course Hero member to access this document

Term
Spring
Professor
N/A
Tags
Accountant, Financial audit, Certified Public Accountant, assurance engagements

Newly uploaded documents

Show More

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture