Based on new information gained during an audit of a nonissuer, an auditor determines that it is necessary to modify materiality for the financial statements as a whole. in this circumstance, which of the following statements is accurate?
a. the auditor is required to reperform audit procedures already completed on the audit using the revised materiality.
b. the auditor should consider disclaiming an opinion due to a scope limitation.
c. the revision of materiality at the financial statement level will not affect the planned nature and timing of audit procedures, only the extent of those procedures.
d. materiality levels for particular classes of transactions, account balances, or disclosures might also need to be revised.

The correct answer is D. Materiality levels for particular classes of transactions, account balances, or disclosures might also need to be revised.

Explanation:

The need for less materiality for significant account / disclosure may occur infrequently; however, it may be appropriate in certain circumstances. The materiality of performance related to a lower materiality for the significant account / disclosure is set to reduce to an adequately low level the probability that the sum of the errors not corrected and not detected in that significant account or particular disclosure exceeds the materiality Minor account / significant disclosure.

We must document the minor amount of the materiality of the significant account / disclosure, if applicable, for each specific significant account or disclosure and the factors considered in its determination.

Materiality Modification

The materiality for the financial statements taken together (and, if applicable, the lower materiality for the significant account / disclosure) may be modified as a result of:

cognitive overload: having a lot on your mind impairs decision-making and tends to result in the simplest, but not necessarily best, option being selected.

empathy gaps: overlooking how you might feel in a different situation can result in unnecessary purchases, such as overbuying when shopping for food on an empty stomach.

optimism and overconfidence: wearing rose-tinted glasses and having unrealistic expectations about the future can affect money management and leave you unprepared for a change in circumstance.

instant gratification: seeking instant gratification drives impulsive spending and can undermine long-term planning and savings.

harmful habits: automatic or mindless behaviour can amplify a poor financial decision as it becomes a recurring event.

social norms: we are heavily influenced by the actions of others; while this can be in certain circumstances, it also contributes to the pressure to keep up with the joneses through conspicuous consumption.

the answer is b. the events might happen and are based on crimes.