Question：Which is the best way of describing a material item?

　　A. It amounts to more than 5% of the total of which it forms a part.

　　B. It is an item the knowledge of which is likely to influence the users' understanding of the accounts.

　　C. It is large in relation to the same figure in previous years.

　　D. It is one which would reduce a company's profits.

　　The correct answer is: It is an item the knowledge of which is likely to influence the users' understanding of the accounts.

　　All other options are used in assessing whether an error is material or not.

　　Question：Review reports give an expression of negative assurance.

　　This tells the reader that:

　　A. The financial statements do not give a true and fair view.

　　B. The auditors are unable to determine whether the financial statements give a true and fair view.

　　C. The auditors' procedures allow them to positively state that the financial statements give a true and fair view.

　　D. Nothing has come to the auditors' attention to suggest that the financial statements do not give a true and fair view.

　　The correct answer is: Nothing has come to the auditors' attention to suggest that the financial statements do not give a true and fair view.

　　Negative assurance is assurance of a fact in the absence of any indicators to the contrary, rather than positive assurance that indications have led the auditors to conclude the fact is true.