GOA Mike and Elizabeth, two audit staff associates are working on the audit of PeaGram LLC, a nationwide distributor of frozen foods. Mike and Elizabeth are discussing the concept of materiality, and how this concept is related to the auditing profession. The two staff associates have differing opinions on what materiality is, and why it is important. Which of the following answers best describes materiality and why is it important? O Materiality is an important concept, and one that the auditing profession takes seriously. During the attest engagement of a public company, generally accepted auditing standards require the auditor to meet with the client's audit committee and senior management and set the appropriate level of materiality. O Materiality can be best thought of as information that might influence decisions that people make pertaining to matters at hand. There is not a predefined quantitative or qualitative threshold for materiality; rather it is determined more on a case-by-case basis. O Materiality is an important concept in auditing, and relates to determining a threshold of when something is considered to be important by a reasonable person. Every auditing firm has a predetermined and set level of materiality which is exercised on every engagement to ensure consistency. O Materiality is determined by the courts, and so auditors are typically less concerned about this concept. So long as the auditor adheres to court determined materiality thresholds, then it is unlikely that any suit against them will prevall MacBook Air