Week 2 - Using Materiality Flashcards
1
Q
The assessment of materiality at this planning stage should be based on…
A
The most recent and reliable information and will help to determine an effective and efficient audit approach
2
Q
How often must the level of materiality be reviewed?
A
Must be reviewed constantly as the audit progresses and changes may be required
3
Q
What is the first reason changes may be required?
A
Draft financial statements are altered (Due to corrections to material misstatements) and therefore overall materiality changes
4
Q
What is the second reason changes may be required?
A
External factors may cause changes in risk estimates
5
Q
What will materiality assessment help the auditors to decide?
A
- how many and what items to examine
- to use sampling techniques
- what level of misstatement is likely to lead to an auditor to say the financial statements do not give a true and fair view
