Provide two examples of when an auditor might set a lower level of performance materiality for a particular class of transactions, account balance, or disclosure.

An auditor might set a lower level of performance materiality for a particular account balance if it is harder to audit and no material misstatements are expected $($e$.$g$.$ payroll expenses$)$ or or if the auditor expects that a misstatement of a lower amount in a particular account or transaction might influence an investor $($e$.$g$.$ disclosure of a related party transaction$).$ This is because performance materiality is inversely related to the amount of evidence an auditor will accumulate.

An auditor might set a lower level of performance materiality for a particular account balance if it is easy to audit and no misstatements are expected $($e$.$g$.$ notes payable$),$ or if the auditor expects that a misstatement of a lower amount in a particular account or transaction might influence an investor $($e$.$g$.$ disclosure of a related party transaction$).$

An auditor might set a lower level of performance materiality for a particular account balance if it is harder to audit and many material misstatements are expected $($e$.$g$.$ notes payable$),$ or if the auditor expects that a misstatement of a higher amount in a particular account or transaction might influence an investor $($e$.$g$.$ disclosure of a related party transaction$).$

An auditor might set a lower level of performance materiality for a particular account balance if it is easy to audit and no misstatements are expected $($e$.$g$.$ payroll expenses$)$ or if the auditor expects that a misstatement of a higher amount in a particular account or transaction might influence an investor $($e$.$g$.$ disclosure of a related party transaction$).$ This is because the level of performance materiality is directly related to the amount of evidence an auditor will accumulate.