Explain how materiality affects audit reporting decisions.
9. What is “MATERIALITY” in Auditing? Explain how MATERIALITY affects audit reporting decisions in details.
Explain why decisions about acceptable audit risk, inherent risk, the preliminary judgement about materiality, and performance materiality should be made early in the audit during the planning phase.
Explain how the levels of acceptable audit risk and materiality you selected in this assignment might affect the remainder of the audit. Specifically, what effect would lower levels of acceptable audit risk and materiality have on the audit compared to the levels you selected?
Describe materiality and how auditors assess and identify materiality. Contrast between Operation Audit, Compliance Audit, Financial Statement Audit. Provide examples from a publicly-traded company.
During an audit, an audit is required to establish performance materiality for several balance sheet accounts. Explain/justify how you would choose the performance materiality amounts for each of the following accounts: (a) accounts receivable, (b) allowance for bad debt, (c) accounts payable.
1. What is meant by materiality and how does it impact the audit planning process? 2. What are the pre-engagement activities of an audit? Why are they important?
Answer the Following Questions in detail 1. Differentiate between “Auditing” and “Accounting” . 2. What are different Types of Risks? Explain the importance of auditing in reducing information risk, the causes of information risk, and explain how this risk can be reduced. 3. What do you understand by Quality Control Standards & Practices within the Accounting Profession? 4. What do you understand by the term “Audit Report”? 5. What the 4 Categories of Audit Report? Briefly Explain 6. What is...
Why are different materiality thresholds relevant for different audit engagements? Why are different materiality bases considered when determining planning materiality? Why is the materiality base that results in the smallest threshold generally used for planning purposes? Why is the risk of management fraud considered when determining performance materiality?
Review Garcia and Foster’s calculations of materiality thresholds for the 20X2 Audit . Determine if the auditors correctly applied the materiality concept in their risk assessment procedures. Describe any problems you find and provide suggestions for improvement. This question relates to step 2 of the Garcia and Foster Audit Plan. Step 2: Requires the audit team to obtain and document its understanding of the client’s environment including internal controls. This understanding allows auditors to identify significant risks in the audit...
According to your textbook, auditors have to make judgments concerning materiality on every audit. Since the auditing standards give no formal guidance for how to determine materiality, auditors must rely on their own experience. Determine at least three (3) qualitative factors that affect the auditor's judgment. Provide a rationale for your response. According to the textbook, auditors rely on the audit risk formula to determine the types and amount of audit evidence to collect in order to keep the overall...