AA – L2 – SA – Q2.5 – Materiality

Identify what is not true about materiality.

Question

Which of the following is NOT true about materiality?

A Certain matters are always material

B Essentially materiality is a matter of judgment

C Matters that are not material should always be considered in isolation D Materiality affects sample size

Answer

Explanation:
Materiality involves judgment (B), affects sample size (D), and some matters (e.g., fraud by management) are always material (A). However, non-material matters (C) are considered in aggregate, not isolation, to assess their cumulative impact. Thus, C is not true and is the correct answer.

Tags: Audit Planning, ICAG, Judgment, Materiality, Sample Size
Level: Level 2

Topic: Planning and Approach for Audit and Assurance Engagements

Uploader: Salamat Hamid