making the allocation of preliminary judgment about materiality (PJAM) to tolera

Question

making the allocation of preliminary judgment about materiality (PJAM) to tolerable misstatement CTM), the auditor should a. allocate the b. allocate a same percentage of TM to an account for both overstatement and understatement. propensity to overstatement lower percentage of TM to an account which has a low and understatement relative to other accounts. c. allocate a higher percentage of TM to an account which has a high cost of collecting audit d. allocate a higher percentage of TM to an asset account than a liability account evidence relative to other accounts

Explanation / Answer

In making the allocation of PJAM to TM, the auditor should

c. allocate a higher percentage of TM to an account which has a high cost of collecting audit evidence relative to other accounts.

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