Auditing · Audit Materiality
According to international auditing standards, which of the following statements about performance materiality is NOT true?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The performance materiality level is affected by the auditor's understanding of the entity and the nature and extent of misstatements identified in prior audits.
- 2Once the level of materiality for the financial statements as a whole has been set, a lower level of performance materiality is determined by the auditor using professional judgement.
- 3Performance materiality refers to the amounts set by the auditor at higher than the materiality level for partic ular c lasses of transactions.✓
- 4Performance materiality is used to reduce the risk that the aggregate of uncorrected and undetected misstatements exceeds materiality for the financial statements as a whole to an acceptable level.
Correct answer
Performance materiality refers to the amounts set by the auditor at higher than the materiality level for partic ular c lasses of transactions.
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