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ACCA Strategic Professional · Advanced Audit and Assurance (International) · The assurance of sustainability

When planning the limited assurance engagement on Zephyr plc's sustainability report, Marlow & Co considers materiality. Which statement best describes the approach to materiality?

Materiality reflects the information needs of the intended users and involves both quantitative and qualitative considerations, such as the sensitivity of a metric or stakeholder interest. It is not a fixed percentage of profit, it applies to limited assurance too, and it is the practitioner's judgement rather than management's decision.

  1. AMateriality considers the information needs of the intended users, and both quantitative and qualitative factors are relevantCorrect
  2. BMateriality is determined solely as a fixed percentage of Zephyr's profit before tax
  3. CMateriality is irrelevant to limited assurance engagements
  4. DMateriality is set by management and cannot be revised by the practitioner

Explanation

Materiality is judged by whether omissions or misstatements could influence users' decisions, so qualitative factors such as sensitivity of the metric, regulatory interest and stakeholder expectations matter alongside quantities. A fixed profit percentage is unsuitable for non-financial data. Materiality applies to all assurance levels and is the practitioner's judgement.

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