AAA – Nov 2012 – L3 – SA – Q14 – Regulatory Framework and Professional Standards

Determining criteria for immaterial information based on ISA 320.

Question

According to ISA 320, the auditor is expected to treat information as IMMATERIAL if:

A. Its omission could influence the economic decision of users based on the financial statement
B. Its misstatement could alter the decision of stakeholders based on the financial statements
C. Its omission is within the audit objective
D. Its misstatement will make an audit objective to be defeated
E. Its omission threatens the going concern of the organisation

Answer

C. Its omission is within the audit objective

Explanation:
The correct answer is “C” because, under ISA 320, information is considered immaterial if its omission or misstatement does not affect the audit objective or the decisions of users based on the financial statements. Material information, conversely, could impact user decisions and must be accurately represented to meet the audit objective.

Tags: Audit Standards, Financial Statements, Immaterial Information, ISA 320, Materiality
Level: Level 3

Topic: Regulatory Framework and Professional Standards
Series: NOV 2012

Uploader: Dotse