Home › CA Final › auditing › Standards on Auditing and Professional Ethics › Performance materiality is:
Performance materiality is:
AAn amount set BELOW overall materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality
BAlways equal to overall materiality
CAlways 50% of audit fee
DSet by SEBI
Answer & Solution
Correct answer: B. Always equal to overall materiality
1. SA 320.9 defines performance materiality below overall materiality, often 50-75%.
2. It addresses risk of aggregate misstatements crossing materiality.
3. It is a professional judgement based on entity-specific risk.
_Source: ICAI BoS CA Final Paper 3, Ch 6 "Standards on Auditing and Professional Ethics"_
Related questions
Investigation / Due Diligence (DD) versus audit - the KEY difference is:Forensic audit, distinct from statutory audit, is:Emphasis of Matter (EoM) paragraph under SA 706 is used when:In the auditor's report, the section on Auditor's Responsibilities should describe:SQC 1 (Standard on Quality Control 1) at FIRM level requires:SA 540 (Revised) for accounting estimates requires:SA 600 (Revised) for group audits emphasises:Auditor's independence under Section 144 of Companies Act 2013 - the auditor of a compan