Task: (Audit Assessment of Materiality)
The audit report provides reasonable assurance that the financial statements are free from material misstatements. The auditor is put in a difficult situation because materiality is defined from a user viewpoint, but the auditor must assess materiality in planning the audit to ensure that sufficient audit work is performed to detect material misstatements.
Required to do:
Q1. Define materiality as used in accounting and auditing.
Q2. Briefly discuss the difference between a "quantitative" assessment of materiality and a "qualitative" assessment of materiality.Give an example of each. Is one dimension more important than the other? Explain.
Q3. Once the auditor develops an assessment of materiality, can it change during the course of the audit? Explain. If it does change,what is the implication of a change for audit work that has already been completed? Explain.