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Judgments about materiality are:
The definition of materiality is one that will influence the decision of the reader. Therefore, the size and nature of the decision will impact materiality
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In terms of materiality
The auditor's judgment determines the materiality level that the auditor is willing to accept.
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In planning the audit, materiality provides a basis for:
Materiality is the basis for determining the nature and extent of risk. This is examined during the planning stages. The sample size and testing are developed based on the level of materiality.
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If new info becomes available that could require a reevaluation of the quantitative level of materiality applied during an audit of an issuer, then the auditor should:
If new information becomes available that could require a reevaluation of the quantitative level of materiality applied during an audit of an issuer, then the auditor should raise or lower the materiality level as appropriate to the situation.
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Of the following, which best describes the concept of materiality?
According to the US Supreme Court, information is material if there is a substantial likelihood that the information would be viewed by a reasonable investor as having significantly altered the total mix of available information.
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Of the following, which benchmark would be utilized when considering the materiality of a single cash transaction?
All of the answer choices are different thresholds, determined by experienced auditors. Analyzing a single transaction compared to a whole balance sheet account should use proper benchmarks.
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