ACCA Strategic Professional · Advanced Audit and Assurance (International) · The audit of performance information (pre-determined objectives) in the public sector
Which of the following is a direct implication of the auditor's materiality judgement when auditing a public body's performance information, as opposed to its financial statements?
Materiality for performance information is judged by nature as well as amount, considering the public interest and the needs of users such as legislators and citizens. It is not irrelevant for non-financial data, not just a budget percentage, and not set by management.
- AMateriality is irrelevant because performance information is non-financial
- BMateriality is set solely as a fixed percentage of the body's total budget
- CMateriality is judged by nature as well as amount, taking account of the public interest and the users' needs, such as legislators and citizensCorrect
- DMateriality is determined by management and the auditor must accept it
Explanation
For non-financial performance information, materiality relies heavily on qualitative factors, such as public interest, sensitivity and the importance of the objective to users, as well as quantitative deviations. A budget percentage alone is inadequate, and the auditor, not management, makes the judgement.
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