ISA 320 (1)

Question 1

When is information material?

Answer 1

If its omission or misstatement could reasonably be expected to influence the economic decisions of users taken on basis of financial statements

Question 2

What are two aspects of materiality?

Answer 2

Quantitative materiality and qualitative materiality

Question 3

How is the materiality level set by the auditor be?

Answer 3

A matter of judgement and will depend on the level of audit risk

Question 4

Materiality level has critical impact on (procedures)

Answer 4

Nature, timing and extent of audit procedures performed

Question 5

What happens at the lower the level at which materiality is set?

Answer 5

More work will need to be performed to ensure overall audit engagement risk is kept an acceptably low level

Question 6

Materiality level has critical impact on (sampling)

Answer 6

Whether to use sampling techniques

Question 7

Materiality level has critical impact on (misstatements)

Answer 7

Evaluation of the effect of misstatements

Question 8

Evaluation of the effect of misstatements (adjustments)

Answer 8

Whether to seek adjustments to the financial statements

Question 9

Evaluation of the effect of misstatements (modifications)

Answer 9

Degree of any auditor’s report modification