CAF-8 · Chapter 3 · Question 1 of 10
Which of the following defines 'Performance Materiality'?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) An amount set below overall materiality to reduce the probability that aggregate uncorrected and undetected misstatements exceed overall materiality.
Explanation
Performance materiality is set lower than overall financial statement materiality to provide a buffer against the aggregation of small, undetected errors.
More Planning and Risk Assessment MCQs
- Q3During analytical procedures at the planning stage, the auditor notes that the client's gross profit margin has unexpectedly increased…
- Q4A client's executive compensation is heavily tied to meeting an aggressive 25% annual profit growth target. According to ISA 240, what…
- Q5If an auditor assesses the risk of material misstatement (Inherent Risk x Control Risk) as high, how must they adjust Detection Risk to…
- Q6Which of the following is a primary difference between the Overall Audit Strategy and the Audit Plan?
- Q7When auditing an unlisted, not-for-profit charitable trust, what is generally the most appropriate benchmark for setting overall…