alleryStart learning →How are audit risk and the materiality level set by the auditor related?
ADirectly proportional
BWholly unrelated
CEqual in all audits
DInversely related
Answer & Solution
Correct answer: D. Inversely related
The higher the audit risk, the lower the materiality is set, so the two move in opposite directions.
Keep practising Risk Assessment and Internal Control
Browse all Risk Assessment and Internal Control questions for CA Final, or explore more Auditing topics.
Related questions
Which is correct about auditors and internal control?The COSO risk assessment component involves what?A payables system matches order, receipt and invoice before paying. Which objective?Maintaining documentation to substantiate transactions is which control activity?Why did the IASB decline a uniform numeric materiality threshold?Materiality is reassessed at the conclusion of the audit before the report is issued. WhatWhat is the purpose of setting performance materiality?Which expression gives audit risk in the audit risk model?