Performance materiality is set by the auditor with the objective of reducing the likelihood of undetected material misstatements and the audit risk to an acceptably low level. What is the purpose of setting performance materiality?
1) To increase the likelihood of undetected material misstatements
2) To increase the audit risk to a high level
3) To reduce the likelihood of undetected material misstatements and the audit risk to an acceptably low level
4) To have no impact on the likelihood of undetected material misstatements and the audit risk