Auditing: A Risk Based-Approach to Conducting a Quality Audit
Auditing: A Risk Based-Approach to Conducting a Quality Audit
10th Edition
ISBN: 9781305080577
Author: Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher: South-Western College Pub
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Chapter 7, Problem 16MCQ
To determine

Introduction:

Overall materiality is a boarder concept which involves the limit beyond which the financial statements will considered to be materially misstated.

Let us assume the overall materiality of a business is set at $ 100,000.Any error beyond $100000 will be considered material and affect the audit report.

Performance materiality is set at a level lower than the overall materiality .Its purview includes individual accounts and not overall business. However, in certain situations, the individual items when added together can exceed the overall materiality.

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