Which statement about materiality is TRUE?

The statement that auditors shall determine materiality for the financial statements as a whole for audit strategy is true and reflects a fundamental aspect of the auditing process. Materiality is crucial in an audit because it helps guide auditors in focusing their efforts on areas that could significantly impact the financial statements.

Determining materiality involves evaluating both quantitative aspects (such as numerical thresholds) and qualitative factors (such as the nature of certain transactions or disclosures). By establishing a materiality threshold for the financial statements overall, auditors can tailor their audit strategies, including the extent of testing and the assessment of risks. This comprehensive approach helps ensure that the audit is efficient and effective in highlighting key areas that may require further attention.

In contrast, the other statements do not align with auditing principles. For instance, auditors certainly need to consider changes in circumstances throughout the engagement, as these can directly influence materiality. Additionally, materiality is not constant throughout the audit; it can change based on new information or changes in conditions. Lastly, materiality does not have to remain the same for all classes of transactions as it can vary based on the specific context or nature of those transactions, which auditors must take into account when planning their work.