Week 2 - Performance Materiality

Question 1

Define performance materiality

Answer 1

The amount/s set by the auditor at less than materiality for the financial statements as a whole to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceed materiality for the financial statements as a whole

Question 2

What does the concept of performance materiality focus on?

Answer 2

The difference between the level of tolerable misstatement and the level of actual misstatements detected