ISA 320 (4) Flashcards
What is performance materiality? (materiality level)
The amounts set by the auditor at less than materiality level for particular classes of transactions, account balances or disclosures
What is performance materiality? (FS)
Ammounts set by the auditor at less than materiality for the financial statements to reduce an appropriate low level the probability that the aggregate of uncorrected/undetected misstatements exceeds materiality for FS as a whole
What does determining performance materiality involve?
The auditor’s professional judgment
How is this judgment affected?
By their understanding of the entity and results of risk assessment procedures.
Can be qualitative and quantitative
An example of account balances tha could be expected to significantly influence decisions of users
Revenue for the year
What may auditors decide to do for these account balances?
Use performance materiality when performing their audit procedures
When may materiality need to be revised?
Due to events that occur during the audit
New infromation
Change in auditor’s understanding of the entity
What should be done when evaluating whether the financial statements give a true and fair view?
Auditor should assess the materiality of the aggregate of uncorrected misstatements.
How is this materiality normally documented?
On a schedule of unadjusted differences
