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Exam AUD topic 1 question 392 discussion

Actual exam question from AICPA's AUD
Question #: 392
Topic #: 1
[All AUD Questions]

In considering materiality for planning purposes, an auditor believes that misstatements aggregating $10,000 would have a material effect on an entity's income statement, but that misstatements would have to aggregate $20,000 to materially affect the balance sheet. Ordinarily, it would be appropriate to design auditing procedures that would be expected to detect misstatements that aggregate:

  • A. $10,000
  • B. $15,000
  • C. $20,000
  • D. $30,000
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Suggested Answer: A 🗳️
Choice "A" is correct. Because the statements are interrelated, the auditor ordinarily considers materiality for planning purposes in terms of the smallest aggregate level of misstatement that could be considered material to any one of the financial statements.
Choices "B", "C", and "D" are incorrect, based on the above explanation.
by gemazyni at April 5, 2025, 4:35 p.m.

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