Final answer:
Audit procedures should be designed to detect misstatements that aggregate $10,000, the lower threshold of materiality, to ensure financial statement integrity.
Step-by-step explanation:
When considering materiality for planning purposes, the auditor determines a threshold level of misstatements that would be material to the financial statements. If an auditor believes that misstatements aggregating $10,000 will materially affect the income statement, and it would take $20,000 to materially affect the balance sheet, audit procedures should be designed to detect the smaller threshold amount. In this case, the procedures should be able to detect misstatements that aggregate $10,000 because this is the lower threshold of materiality for the financial statements being considered.
Detecting the smallest level of material misstatement ensures that the audit is designed to catch any errors that could potentially mislead the users of the financial statements. Since the income statement, which is generally viewed as a primary financial statement for assessing performance, would be materially impacted by a misstatement at the $10,000 level, the audit focus should be on this threshold to maintain financial statement integrity.