Question

Which of the following statements about auditing standards is correct?

1) The auditing standards provide rigorous guidelines for determining performance materiality.
2) The auditing standards do not provide any guidelines for the determination of performance materiality.
3) The auditing standards provide limited guidelines for the determination of performance materiality.
4) None of the choices is correct.

Answer 1

The auditing standards offer limited guidance on performance materiality, requiring auditors to apply professional judgment to determine what constitutes materiality at the account or transaction level.

Thus, the correct optrion is 3.

Step-by-step explanation:

The correct statement regarding auditing standards and performance materiality is: 3) The auditing standards provide limited guidelines for the determination of performance materiality. Auditing standards, such as those set by the American Institute of Certified Public Accountants (AICPA) or the International Auditing and Assurance Standards Board (IAASB), outline the principles and expectations for the conduct of auditors but they tend to provide only a broad framework. The specifics of performance materiality, which is the threshold for what is considered material at the individual account or transaction level, may vary based on the auditor's professional judgment and the context of the audit engagement.