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Exam Code: 100-890
Exam Name: Supporting Cisco Collaboration Devices
Certification Provider: Cisco
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NEW QUESTION: 1
Which of the following statements is correct concerning materiality in a financial statement audit?
A. The auditor's materiality judgments generally involve quantitative, but not qualitative, considerations.
B. Analytical procedures performed during an audit's review stage usually decrease materiality levels.
C. Materiality levels are generally considered in terms of the smallest aggregate level of misstatement that
could be considered material to any one of the financial statements.
D. If the materiality amount used in evaluating audit findings increases from the amount used in planning,
the auditor should apply additional substantive tests.
Choice "D" is correct. Because the financial statements are interrelated, materiality levels are generally
considered in terms of the smallest level of misstatement that could be material to any one of the financial
Choice "A" is incorrect. Analytical procedures are performed during an audit's review stage to evaluate the
overall financial statement presentation and to assess the conclusions reached. They generally would not
result in a change in materiality levels.
Choice "B" is incorrect. If the materiality amount used in evaluating audit findings increases from the
amount used in planning, the auditor should consider whether the audit plan needs to be modified.
Typically, an increase in materiality levels would result in a decrease in audit risk, which would result in
less substantive testing, not more.
Choice "C" is incorrect. Qualitative considerations may lead to situations in which misstatements that do
not exceed materiality limits are still likely to influence the economic decisions of users. In such cases, an
otherwise immaterial misstatement is deemed to be material.
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